The Inventory Equation Accounting is a key concept in business, which describes the relationship between inventory, cost of goods sold, and ending inventory. This equation states that the value of your inventory at any given time will equal the beginning inventory plus purchases minus cost of goods sold. By using this equation, businesses can accurately calculate their inventory levels and measure their performance over time. With this information, business owners can make informed decisions about managing their inventory, such as when to re-order more items or adjust pricing. Ultimately, the Inventory Equation Accounting helps businesses achieve better financial health and stability.