All guidesHow Horizon213 thinks
What your stock is worth
Horizon213 values stock at a moving weighted average, per company. This is why the figure changes when you buy, and not when you sell.
- Steps
- 5 · About 3 min
- Who can do this
- Owner · Manager · Accountant · Team member · Read only
- Needs the module
- How Horizon213 thinks
Ask what a carton on your shelf is worth and there is no single obvious answer. You bought some at 180 and some at 210. Which one is on the shelf?
Horizon213 answers: neither. It keeps a moving weighted average — one cost per product per company, recalculated every time you receive stock.
How the average moves
You hold 100 cartons that cost 180. You receive 50 more at 210.
You now hold 150, and their total cost is 100 × 180 + 50 × 210 = 28,500. The
new unit cost is 28,500 ÷ 150 = 190.
From that moment every carton is worth 190, including the ones bought at 180. The next receipt moves it again.
Selling does not change it
Delivering or selling takes stock out at the current average. It does not change the average — the remaining cartons are still worth what they were worth a moment ago.
That is the property worth internalising: buying moves the cost, selling moves the quantity. If your stock value changed and you have not received anything, something else happened — an adjustment, a reversal, a receipt somebody posted late.
Why an adjustment costs money
A count adjustment does not only change how many you have. It changes what you hold, at the current average, and that difference lands in your accounts.
Remove ten cartons at an average of 190 and 1,900 has left the business. That is why a stock movement asks for a reason, and why counting carefully is worth more than counting often.
Two things it is not
It is not per warehouse. The average is one number per product, per company. Moving stock between your own warehouses changes where it is, not what it cost.
It is not FIFO or lot costing. Horizon213 records lot numbers and expiry dates where goods arrive, and will tell you what is nearing its date — but it cannot tell you which lot a particular sale drew from, and the cost is the average rather than that lot's own price.
What it means for your margin
The margin on a sale is what you charged minus the average cost at the moment it went out. It is therefore a good answer, not a perfect one: in a month when prices moved sharply, the average sits between what you actually paid at either end.
That is the accepted trade for not tracking every carton individually — and for an Algerian business buying the same packaging from the same supplier all year, the difference is small and the simplicity is large.