Accounting
Pharma inventory valuation and COGS: the records behind the report
Inventory valuation and cost of goods sold are useful only when purchasing, stock movement and returns are recorded consistently.
On this page
What the two numbers mean
Inventory valuation is the value assigned to closing stock. COGS is the cost of the goods sold in the period; in a simple view it equals opening stock plus purchases minus closing stock. Together they decide gross margin, which is why errors in stock or purchase data reach the Profit and Loss report quickly.
Why purchase data matters
Purchase rates, received quantities and adjustments affect the value assigned to stock. Late or incomplete entries make later reporting harder to interpret. Common valuation approaches include FIFO and weighted average cost; ask your accountant which method your business should use and confirm how your software applies it.
Returns need the same discipline
Sales and purchase returns change both operational stock and accounting records. Treat them as linked transactions rather than informal quantity edits, so that stock value, supplier balances and customer balances move together.
Use reports to investigate
Compare sales, gross margin, stock movement and unusual adjustments over a defined period. Useful questions:
- Did margin fall in a month with many returns or write-offs?
- Are there large adjustments without a recorded reason?
- Does physical stock match the system after a stock count?
- Are some purchases still unentered at period end?
How MAYA ERP fits
MAYA ERP includes inventory valuation and COGS alongside ledgers and financial reports. Ask an accountant to confirm accounting treatment for your business and test your own scenarios in a demo.
Frequently asked questions
What is COGS?
Cost of goods sold is the cost of the stock sold in a period. In a simple view: opening stock plus purchases minus closing stock.
Why do my margins look wrong?
Unentered purchases, informal quantity edits and unrecorded returns are common causes. Check source records before the report.
Which valuation method should I use?
Common methods include FIFO and weighted average. Your accountant should advise which fits your business and reporting requirements.
See it with your own workflow
Bring your own purchase, sales, return and reporting scenarios and see them end to end.