How to make a valued Kardex
How to make a valued Kardex
If your business sells physical products, you have probably heard of the kardex: the record where merchandise inflows and outflows are written down as they move through your warehouse. However, tracking only quantities is like knowing how many boxes are on the shelf without knowing how much money they represent. A valued kardex solves that limitation, because it records the cost of every movement in addition to the units. That way, at any moment you can answer with precision how much money is invested in your inventory and what the goods you sold actually cost you.
In this article we explain what a valued kardex is, what columns it should have, how each movement is valued by multiplying the unit cost by the quantity, and we walk you through a step-by-step example with real numbers that you can replicate in your own company.
What is a valued kardex
The traditional kardex records how many units come in, how many go out and how many remain in stock. The valued kardex does exactly the same, but every line also carries monetary values: the unit cost of the product and the total cost of the movement. Because of that, the inventory record does not only say "70 units left", it says "70 units left, valued at 77,000", which is far more useful information for making decisions.
The difference matters. With a quantity-only kardex, if the purchase price changes from one invoice to the next, it is impossible to know which cost to assign to the goods that leave. With a valued kardex, every outflow is calculated using a defined criterion, such as the weighted average cost, and the balance is always expressed in money. That turns the kardex into an accounting and financial tool, not just an operational one.
What columns a valued kardex has
A complete valued kardex format is organized in three main blocks: inflows, outflows and balance. The basic columns are the following:
- Date: the day the movement happens, whether it is a purchase, a sale, a return or an adjustment.
- Detail or concept: the description of the movement, for example "initial purchase" or "sale to customer".
- Inflows: quantity received, unit cost of that purchase and total value of the inflow.
- Outflows: quantity shipped, unit cost applied and total value of the outflow, which is the cost of goods sold.
- Balance: units remaining, current unit cost and total value of the inventory left.
Some formats add auxiliary columns, such as the invoice number, the supplier or customer name or an observations box. Those columns are welcome, but the heart of the valued kardex is the three blocks above, each with its quantity, its unit cost and its total value.
How the kardex is valued: unit cost times quantity
The logic of the valued kardex is simple: every movement is converted into money. For an inflow, the total value is the quantity purchased multiplied by the purchase unit cost. For an outflow, the total value is the quantity sold multiplied by the unit cost that corresponds according to the valuation method your company has chosen.
The weighted average cost is a very common method in small businesses. The idea is that, when a new purchase arrives at a different price, the unit cost of the product is recalculated by dividing the total value of the inventory by the total number of units available. That produces a new average cost, which is applied to the following outflows until another purchase arrives and the calculation is done again.
It is important to understand that the valuation depends on the cost at which you bought the merchandise, not on the price at which you sell it. If you sell an item for 15,000 that cost you 10,000, the outflow in the kardex is recorded at 10,000. The difference between the two values is your profit, and it can only be calculated with certainty if your kardex is valued.
Step-by-step example of a valued kardex
To see it in practice, imagine that your company handles a single product and that during the month of March it records these movements: an initial purchase of 100 units, a sale of 40 units, a second purchase at a different price and another sale. This is how the valued kardex would look using the weighted average cost method (amounts shown in a generic currency):
| Date | Detail | Inflows | Outflows | Balance | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Qty | Unit cost | Total | Qty | Unit cost | Total | Qty | Unit cost | Total value | ||
| Mar 1 | Initial purchase | 100 | $1,000 | $100,000 | – | – | – | 100 | $1,000 | $100,000 |
| Mar 6 | Sale to customer | – | – | – | 40 | $1,000 | $40,000 | 60 | $1,000 | $60,000 |
| Mar 12 | Purchase at another price | 40 | $1,250 | $50,000 | – | – | – | 100 | $1,100 | $110,000 |
| Mar 18 | Sale to customer | – | – | – | 30 | $1,100 | $33,000 | 70 | $1,100 | $77,000 |
Let us review what happened on each line. On March 1, 100 units come in at 1,000 each, so the inventory is valued at 100,000. On March 6, 40 units go out; since the current average cost is 1,000, the outflow is recorded at 40,000, which is the cost of goods sold for that day, and the balance is 60 units worth 60,000.
On March 12, the key movement happens: a purchase of 40 units arrives, this time at 1,250. The total value of the inventory goes up to 110,000 (the previous 60,000 plus the 50,000 of the new purchase) and the available units add up to 100. Dividing 110,000 by 100 gives a new average cost of 1,100. That is why the balance column no longer shows 1,000 but 1,100.
Finally, on March 18, 30 units are sold. Because the average cost was already updated, those units go out at 1,100 each: the cost of goods sold is 33,000 and the balance is 70 units valued at 77,000. If that sale had been made at 1,500 per unit, the revenue would have been 45,000 and the gross profit of the operation, 12,000.
What a valued kardex is for
The first use is calculating the cost of goods sold. Each outflow in the valued kardex tells you how much the merchandise you delivered to your customer cost, an essential figure for determining the gross profit of the business. Without that figure, any profitability calculation is just a guess.
The second use is knowing the value of your inventory. The final balance of the kardex, expressed in money, is the value of the merchandise you have available. That value is needed for your financial statements, to know how much capital is tied up in the warehouse and to decide whether it is better to buy more stock or to liquidate items that do not move.
The third use is controlling profitability product by product. By comparing the unit cost of each outflow with the selling price, you quickly identify which items leave a margin and which ones are being sold almost at cost. The valued kardex also helps detect discrepancies: if the record says there are 70 units left but the physical count finds 65, there is an inconsistency that should be investigated in time.
Keeping the valued kardex up to date
Keeping the valued kardex by hand, movement by movement, works when the business is very small and the volume of operations is low. But as purchases and sales grow, the risk of mistakes and delayed records rises quickly: a movement that is never recorded undervalues the inventory and distorts the cost of goods sold for the whole period.
That is why many owners of small businesses use an inventory program. In Kardex Tauro, when you register a purchase, the kardex movement is generated automatically and the average cost of the product is updated: there is no need to type anything again into the card. In the same way, the sales registered in the system generate the corresponding outflow in the kardex.
In this way, Kardex Tauro keeps the valued record up to date as you receive purchases and make sales, and whenever you need to know how much inventory you have and what it is worth, the figure is available without reconciling spreadsheets manually. The valued kardex, done by hand or with the help of Kardex Tauro, stops being paperwork and becomes a source of decisions: how much to buy, what to sell and at what price.