Skip to main content

Stock Valuation & Costing

In any inventory-driven business, understanding the value of stock and the true cost of goods sold is essential for effective financial management and decision-making. PrismERP’s Stock Valuation & Costing module offers comprehensive features to help you accurately value your inventory in real-time and calculate costs based on reliable accounting methods.

This module ensures that your financial records reflect the actual worth of your stock while providing insights into product profitability and cost control — empowering you to make smarter purchasing, pricing, and sales decisions.

Key Components​

Costing Methods​

FIFO (First In, First Out)​

FIFO assumes that the oldest items purchased are the first to be issued or sold.

  • The cost assigned to sales is based on the oldest purchase prices.
  • Closing inventory reflects the most recent purchase costs.
  • Suitable for industries with perishable or time-sensitive stock.
  • Helps prevent product expiry, obsolescence, or overstocking.

Weighted Average Cost​

This method calculates the average cost of all available inventory:

  • Each issue or sale uses the same average unit cost.
  • Smooths out price fluctuations for more stable cost reporting.
  • Ideal for businesses with mixed or frequently changing purchase prices.

Real-Time Inventory Valuation​

As stock enters or leaves your inventory, PrismERP updates your inventory values in real time based on your selected costing method. This provides:

  • Up-to-date financial reports
  • Accurate inventory valuations on the balance sheet
  • Immediate insights for decision-makers

Stock Ledger​

The Stock Ledger is a transaction log for every stock movement, including:

  • Goods Receipt Notes (GRN)
  • Delivery Challans
  • Stock Transfers
  • Adjustments and Reconciliations

Benefits:

  • Complete traceability of inventory history
  • Simplified auditing and compliance
  • Easy review of past transactions

Item-wise Cost of Goods Sold (COGS) Calculation​

COGS is the direct cost of products sold during a period. PrismERP calculates this per item by using:

  • Purchase price history
  • Issue or sale quantities
  • Costing method (FIFO or Weighted Average)

Benefits:

  • Understand product-level profitability
  • Optimize pricing strategies
  • Improve financial reporting accuracy

🔁 COGS Recalculation​

Whenever there’s a change in purchase prices or stock transactions, you can trigger COGS Recalculation to reflect:

  • Adjustments
  • Late purchase entries
  • Inventory corrections

This ensures that your financial data is accurate and up to date at all times.

✅ Business Benefits​

  • 🧾 Accurate Accounting: Ensure real-time and reliable stock values.
  • 💡 Better Pricing Decisions: Use precise cost data to inform product pricing.
  • Improved Visibility: Gain deeper insights into item-level profitability.
  • Compliant Reporting: Maintain consistent and auditable inventory records.
  • Smarter Purchasing: Understand cost trends before procurement decisions.

🧭 Navigation in PrismERP​

To access the Stock Valuation & Costing module in PrismERP