The FIFO Ending Inventory Formula (short for First-In, First-Out) is a technique used to determine the value of inventory at the end of an accounting period. This formula takes the most recently acquired items and assigns them a higher value than the oldest items in inventory. Essentially, FIFO allows businesses to track the cost of goods purchased and sold over time and helps ensure that the most current financial information is reported accurately. By taking into account all the components of production costs, businesses can maximize efficiency and maintain profitability.