The official business definition of Ending Inventory Equation (also known as the Cost of Goods Sold Equation) is an equation used to measure the amount of inventory that a business has on hand at the end of an accounting period. It is calculated by taking the beginning inventory balance plus the purchases made throughout the period, then subtracting the cost of goods sold during the same period. This equation provides businesses with an accurate snapshot of their inventory and helps them track changes in their inventory levels over time. By closely monitoring their ending inventory equation, businesses can ensure that they always have the right number of products available for sale and are not stuck with excess inventory that will quickly become obsolete.