What is the inventory kardex?

An inventory kardex is a detailed, ongoing record of a business's merchandise: it logs every item that comes in and goes out, the balance that remains available, and the cost of each movement. It is the tool that answers two questions every merchant needs to solve every day: how much merchandise is in the warehouse or the store, and how much the products already sold actually cost. The term became popular thanks to the stock-control card system promoted by the Kardex company in the mid-1900s. Over time, the word came to be associated with the card used to track a specific product, which is why people talk about the kardex card or simply about the kardex for an item. Today the record can be kept by hand, in a spreadsheet, or in inventory software, but the concept is the same in all three cases: knowing how much comes in, how much goes out, and how much is left, and what everything is worth.

What the inventory kardex records

The kardex works product by product. Each item has its own card, identified by the product's name, reference, and unit of measure. All movements that affect stock are recorded on that card in chronological order:

Purchase entries: when the business receives merchandise from a supplier, with the date, quantity, unit value, and total value of the purchase.
Sales exits: when part of the stock is sold, the shipped quantity and its cost are deducted from the kardex.
Purchase returns: if merchandise arrives damaged or by mistake and is sent back to the supplier, it is recorded as an exit that reduces stock.
Sales returns: if a customer returns a product, the merchandise comes back into inventory and is recorded as an entry.
Adjustments for overages and shortages: when the physical count does not match the records, the balance is corrected so the kardex reflects what is really in the warehouse.
Other movements: shrinkage, damage, transfers between locations, and items taken for internal use should also be recorded.

Recording all of this has a very concrete purpose: keeping the kardex balance in line with what is actually on the shelves. If the record is up to date, you can know how many units of each product remain at any moment without counting the whole warehouse every time.

What balance and cost mean in the kardex

Each line of the kardex produces two essential pieces of data: the balance and the cost. The balance is the number of units available after each movement. If 50 units come in and then 20 go out, the balance is 30 units. The balance is also expressed in money: multiplying the units by their unit cost shows how much cash is invested in that merchandise. The cost is the value at which the merchandise entered the inventory: the price paid to the supplier plus any expenses needed to make it available, such as freight or insurance. This figure is not mere paperwork: when the product is sold, that value becomes the cost of sales and is subtracted from revenue to calculate the business's real profit. That is why the kardex does not only track quantities; it also tracks the money invested in merchandise and the cost of what was sold. Here a practical difficulty appears. If the same product is bought on different dates at different prices, what value should be removed from inventory when it is sold? Inventory valuation methods answer that question.

Valuation methods: weighted average, FIFO, and LIFO

The valuation method defines how the cost of exits is calculated when a product has several purchase prices. The ones most used in merchandise trade are:

Weighted average: divide the total value of the stock by the total number of units. Every time merchandise comes in at a different price, the unit cost is averaged again. It is the most widely used method because it is simple and smooths out price changes.
FIFO (first in, first out): assumes that the first units purchased are the first ones sold. Inventory is then valued at the most recent costs and the cost of sales at the oldest ones.
LIFO (last in, first out): assumes the opposite: the last units purchased are the first ones to be sold. It is rarely used, and in several countries it is not allowed for tax purposes.

The choice of method does not change how much merchandise is in the warehouse, but it does change the value of the inventory and the cost of sales. It should therefore be defined once, applied consistently, and kept unchanged between periods so the results remain comparable.

Typical columns of a kardex card

A traditional kardex card is organized into sections that let you read a product's complete history at a glance:

Product identification: name, reference or code, unit of measure, and location inside the warehouse.
Date and movement details: the day of the event and a short note, such as the invoice or receipt number.
Entries: quantity, unit value, and total value of the units coming in.
Exits: quantity, unit value, and total value of the units going out through sales or for any other reason.
Stock or balance: the units available after each movement, with their unit value and total value.

With this structure, the last line of the kardex always shows the product's current situation: how many units are on hand and what each one is worth. Digital kardex systems automate these calculations: record the purchase or the sale and the system updates the balance and the cost instantly.

Worked example: kardex with weighted average

To see how it works, let us take a simple, generic example. A business sells a single product, a 500 g box of coffee, and uses the weighted-average method. For simplicity, values are shown in a generic currency represented with the $ sign. The kardex for that product during the month looks like this:

Date	Details	Entries	Exits	Balance (units)	Unit cost	Exit value	Balance value
Mar 01	Opening balance	—	—	40	$12,000	—	$480,000
Mar 05	Purchase from supplier	60	—	100	$12,600	—	$1,260,000
Mar 10	Sale	—	45	55	$12,600	$567,000	$693,000
Mar 15	Purchase from supplier	45	—	100	$12,780	—	$1,278,000
Mar 20	Sale	—	60	40	$12,780	$766,800	$511,200

Step by step, this is what happened:

On March 1 the business opens the month with 40 units valued at $12,000 each, that is, $480,000 in total.
On March 5 it buys 60 units at $13,000. There are now 100 units worth $1,260,000 in total, giving a weighted average cost of $12,600 per unit.
On March 10 it sells 45 units. Under the weighted average, the exit is valued at $567,000 (45 times $12,600) and 55 units remain, worth $693,000.
On March 15 it buys 45 units at $13,000. Stock is back to 100 units, valued at $1,278,000, with a new average of $12,780 per unit.
On March 20 it sells 60 units. The exit costs $766,800 (60 times $12,780) and the month closes with 40 units valued at $511,200.

The example shows the essence of the kardex: by looking only at the last row you know how much is on hand (40 units) and what it is worth ($511,200). And by adding up the exit column you get the month's cost of sales: $567,000 + $766,800 = $1,333,800. If the business sold those 105 units for a total of $1,890,000, its gross profit was $556,200 before deducting any other expense.

What the inventory kardex is for

Keeping a kardex for every product brings benefits you notice every day:

Know how much you have at all times: it prevents running out of a fast-selling product and also prevents tying up money in merchandise that does not move.
Know how much what you sold costs: the cost of sales comes straight from the kardex and is essential for calculating profit and for pricing with a margin.
Detect losses early: comparing the recorded balance with the physical count reveals shortages caused by theft, errors, or shrinkage that would otherwise go unnoticed.
Value the inventory in money: the kardex balance feeds the business balance sheet and supports tax filing or loan applications.
Buy with data, not guesses: the sales history shows which products turn over fastest and how much to order from each supplier.

In short, the inventory kardex turns a warehouse full of boxes into organized information: how many units of each product there are, what they are worth, and how much what has already been sold cost. It is a simple record, but it is the backbone of merchandise control in any business, large or small. If you want to keep the kardex for all your products without calculation errors or complicated formulas, tools like Kardex Tauro do the work for you: record your purchases and sales and your balance, cost, and inventory value will always be up to date.

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#kardex #inventory #cost of sales