Valuation Methods
When materials move in and out of your warehouse, you need a consistent way to calculate their value. itsTrack supports three standard methods.
Why valuation matters
Accurate stock valuation helps you:
- Price jobs correctly
- Report financial data to accounting
- Compare costs across periods
- Meet regulatory requirements
FIFO (First In, First Out)
The oldest stock is used first.
Example: You buy 10 filters at $5 each, then 10 more at $6 each. When you issue 5 filters, they cost $5 each (the older batch).
Best for: Items that expire or become outdated — filters, chemicals, dated parts.
LIFO (Last In, First Out)
The newest stock is used first.
Example: Same stock as above. When you issue 5 filters, they cost $6 each (the newer batch).
Best for: Non-perishable goods where recent purchase price reflects current market value.
Average Cost
Every issue uses the average price of all stock on hand.
Example: 10 filters at $5 + 10 filters at $6 = average $5.50. Every issue costs $5.50 per unit regardless of batch.
Best for: General inventory where batch age does not matter much.
Comparison
| Method | Uses oldest first | Uses newest first | Uses average price |
|---|---|---|---|
| FIFO | ✓ | ||
| LIFO | ✓ | ||
| Average Cost | ✓ |
Setting the method
Valuation method is configured at the material group or warehouse level during setup. Contact your administrator or itsTrack support if you need to change it.
Changing valuation method mid-period can affect financial reports. Discuss with your accountant before switching methods.
Related:
- Material Movements
- Analytics — KPI Metrics — stock value in reports