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While running a business, it is very important to accurately value the inventory for financial reporting, taxation, profitability analysis, and effective decision-making. Businesses depend upon valuation methods. Typically, they use FIFO, LIFO, Weighted Average Cost, and Specific Identification to maximize inventory costs and maintain transparency. This article will guide you and explain each method with easy-to-understand examples, and how partnering with Godamwale is a win-win situation.
At the end of an accounting period, the inventory is valued on the basis of your closing stock and is called Inventory Valuation. This process is very important from a business point of view. It seriously impacts the balance sheet and the profit and loss statement.
Cost of Goods Sold (COGS): It is the total cost of the inventory that a business has sold during a specific period. It includes the purchase cost, production cost, and any direct expenses required to bring the product to a saleable condition. Higher COGS means Lower Profit, and Lower COGS means Higher Profit.
As long as there is market demand for the products it manufactures, a product-based corporation will turn a profit. The business will choose if it is worthwhile to keep producing these goods or to discontinue.
There is one more challenge when it comes to valuing the product. The price of the raw material will fluctuate due to seasonal cycles. This affects the production of the product. The company needs to price these products at such a price that it is cheaper for the consumers to buy and the profit margins are high too.
Since each business enters the market with a view to generating a profit, the pricing of the particular product within a specific segment must survive the competition as well as make a profit after paying off all the taxes and liabilities. As a result, it is important for the company to value the inventory correctly.
Established: 2017
Founders: Ranbir Nandan, Vivek Tiwari, Basant Kumar ,Anand Aryamane
Core Services: On-demand Warehousing, 3PL, Inventory Management, Last-mile Delivery
Godamwale is one of the many third-party logistics companies in India. It offers its in-house platform called Inciflo. This software is ideal for automatic billing. It is also used for last-mile delivery and QR-based dispatch, all in real-time. With the use of this platform, you can not only search for ideal warehouse space that can be rented but also manage businesses without requiring long-term commitments. Godamwale is an ideal partner for FMCG, D2C, manufacturing, and retail brands.
Established: 2011
Founders: Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, Kapil Bharati
Core Services: Fulfillment, Express Parcel Delivery, Inventory Management, Cross-Border Logistics
Delhivery provides a smart logistics option. Its extensive network of warehouses can be found throughout the nation. It uses technology and AI tools in its service. Its clientele includes e-commerce and enterprise customers.
Established: 2007
Founders: Mahindra Group
Core Services: Contract Logistics, Warehousing, Freight Forwarding, Fulfillment
Larger-scale smart warehousing systems are also provided by Mahindra Logistics. In its services, it makes use of cutting-edge technology and AI solutions. It is ideal for enterprise and industrial brands.
Established: 2007 (India operations)
Founders: Deutsche Post DHL Group
Core Services: Contract Logistics, Supply Chain Automation, Multi-user Warehousing
DHL is a global logistics company. It uses the latest technology and AI-powered tools. It is quite popular to offer its services in retail, healthcare, and automotive companies.
Established: 1993
Founder: Shashi Kiran Shetty
Core Services: CFS, Warehousing, Transportation, Supply Chain Solutions
Allcargo offers warehouse management and solutions across the world. It is known to use the latest tech in their services that they have to offer. Its clientele typically involves established enterprises.
Established: 1993
Founders: Gateway Distriparks (Parent)
Core Services: Cold Chain Warehousing, Temperature-Controlled Logistics, Inventory Management
In India, Snowman is a provider of cold-chain warehousing. It provides logistical support tailored to temperature. It is perfect for managing QSR brands, dairy, pharmaceuticals, and frozen meals.
Established: 1997
Founders: Pawan Jain
Core Services: Warehousing, Express Logistics, Supply Chain Solutions
Safexpress provides an extensive nationwide network of warehouses and logistics parks. It also offers quick distribution and reliable inventory operations. It has a list of diverse industrial clients.
Established: 2004 (part of TVS Group)
Core Services: End-to-End Supply-Chain Consulting, Warehousing, Logistics & Distribution, Inventory Forecasting
TVS SCS offers complete supply-chain management solutions. It has a vast network of automated warehouses. It is ideal for big enterprises.
Established: 2016
Founder: Ajay Rao
Core Services: Warehousing, Fulfillment, Distribution, Inventory Control
Emiza offers smart and flexible warehouse options. It is perfect for mid-sized brands and SMEs. High inventory accuracy and optimized operational operations are its goals.
Established: 2014
Founders: Deepak Garg, Gazal Kalra (and founding team)
Core Services: Supply-Chain Logistics, Warehousing, Express Freight, Multi-modal Transport, Fulfilment
Rivigo is a supply-chain logistics company. It has a huge fleet of transportation. It offers its services to those enterprises that require high-volume or long-distance logistics operations.
| Company | Why Choose | Why Not |
| Godamwale | On-demand warehousing, tech-driven WMS, pay-per-use, nationwide reach | Limited global operations |
| Delhivery | Strong fulfillment network, robust tech stack | Service reliability varies in remote locations |
| Mahindra Logistics | Enterprise-grade warehousing & stability | Higher cost for SMEs |
| DHL Supply Chain | World-class automation & global expertise | Premium pricing |
| Allcargo Logistics | Best for large-scale storage & CFS | Not suitable for small/mid-size brands |
| Snowman Logistics | Leading cold-chain storage provider | Limited to temperature-controlled services |
| Safexpress | Pan-India coverage & reliable operations | Lesser automation than global players |
| TVS Supply Chain Solutions | End-to-end SCM, forecasting, enterprise-grade solutions | Too sophisticated (and costly) for small brands |
| Emiza | Cost-effective & accurate | Smaller national footprint |
| Rivigo | Great for long-haul + warehousing + express freight | Transport-focused; warehouse network not as extensive |
There are several reasons to choose Godamwale, a third-party warehouse management and logistics solution company, as your business partner. They are as follows:
Inventory valuation is an important process since the entire profit potential of a business depends on it. It makes no sense to overstock or understock inventories with goods. You, as a business head, will lose all the money gained by the sales of these goods, only to maintain the unnecessary overheads. You need a professional taking care of your logistics support.
Q.1) Which valuation method gives the highest profit?
It has been observed that FIFO generally provides the highest profit among all the valuation methods.
Q.2) Can I change my valuation method mid-year?
Unfortunately, you cannot. You need to complete the financial year before you think of switching over. The reason is that while switching from one valuation method to another, the entire process involves many complicated factors.
Q.3) Is LIFO allowed in India?
No. As per Indian GAAP and IFRS, this method of valuation is not permitted.
Q.4) Does valuation impact GST filings?
Yes. Any errors in the valuation of the goods can have a negative impact when you file your GST.
Q.5) Is WAC ideal for e-commerce?
Yes. Due to high volumes of inbound and outbound goods, this method is ideal for such businesses.
