The Ending Merchandise Inventory Formula is critical for businesses to understand in order to accurately measure their profitability. This formula expresses the cost of goods sold minus the total inventory cost at the end of a given period. By knowing this figure, businesses can determine their available merchandise for sale and adjust their pricing accordingly. It helps them determine how much product they should have readily available, as well as assist in future planning decisions related to product needs. This formula also lays the groundwork for what’s known as the “turnover rate” – a metric that measures how quickly a company can sell its products. Informative yet engaging, the Ending Merchandise Inventory Formula offers valuable insights into a business’s financial performance.