# Gross Profit Method Calculator

The inventory gross profit method is one way of estimating the cost of inventory at the end of an accounting period. This gross profit method calculator works out the historical gross profit percentage of a business, and then uses this to estimate the cost of the ending inventory for the current accounting period.

If you need further information on the use of gross profit methods and the calculations they involve, our gross profit methods in accounting tutorial discusses these in more detail.

## Instructions

The Excel gross profit method calculator, available for download below, is used by entering details of the historical revenue and gross profit, and the current period beginning inventory, purchases and revenue. Using this information, the calculator works out the historical gross profit percentage, the goods available for sale, and estimates the current period cost of goods sold and ending inventory.

To use the calculator enter the details as follows:

### Step 1

Enter the historical revenue and gross profit from the latest available financial statements. The calculator works out the historical gross profit percentage for the business.

### Step 2

Enter the beginning inventory and the purchases made for the current accounting period. Both figures should be entered at cost. The gross profit method calculator calculates the goods available for sale during the accounting period.

### Step 3

Enter the revenue for the current accounting period. Based on the historical gross profit percentage calculated in Step 1, the calculator now estimates the cost of goods sold for the period.

### Step 4

Finally, the gross profit method calculator estimates the ending inventory for the accounting period by deducting the cost of goods sold from the goods available for sale.