Stock Valuation

ERPX values stock using Weighted Average Cost (WAC), and the weighted-average rate is global per item — one single rate for an item across all warehouses.

There is no per-warehouse rate to choose, and no FIFO or LIFO valuation option. This one decision explains most of what you will see in the valuation reports, so it is worth reading once properly.

The two rules

Rule 1 — A receipt re-averages the rate

When stock comes in (GRN, Stock Entry Receipt, Manufacturing, Stock Opening), the new rate is:

                (previous global qty × previous rate) + (incoming qty × incoming rate)
new rate  =  ───────────────────────────────────────────────────────────────────────────
                            previous global qty + incoming qty

“Previous global qty” is the total on-hand quantity of that item summed across every warehouse, as at the posting date.

If there was no stock before, the new rate is simply incoming value ÷ incoming quantity.

Rule 2 — An issue uses the current rate

When stock goes out (Delivery Note, Stock Entry Issue, consumption), the outgoing line is valued at the current global weighted-average rate. An issue never changes the rate — it only reduces quantity and value.

Worked example

Two warehouses, one item. Watch the rate: it is always the same in both.

Reading the table:

• Row 2: (100 × 10 + 100 × 14) ÷ 200 = 12.00.
• Row 3: the receipt is in the Branch, but it still re-averages the global rate: (200 × 12 + 200 × 15) ÷ 400 = 13.50. The Main warehouse’s stock is now valued at 13.50 too.
• Row 4: the issue leaves at 13.50 and the rate does not move.
• Row 5: a transfer moves 30 units of value from Main to Branch at 13.50. Total value is unchanged.

What “global” means in practice

So the Warehouse Inventory Valuation report differs between warehouses only by quantity, never by rate.

Where the rate comes from on each document

Unit conversion

Rates are always stored in the item’s stock UOM and in the organization currency. If you buy in cartons at 1,200 per carton with a conversion factor of 12, the ledger records 100 per piece. Get the conversion factor wrong on the item master and every rate downstream is wrong — which is why ERPX blocks changing it once stock exists.

Backdated documents and recalculation

Because the average depends on the order of transactions, inserting a document into the past invalidates every rate after it. ERPX handles this by recalculating forward, and by enforcing rules on what may be backdated:

The messages you will see:

• “Receipt cannot be dated before the Opening Entry. Opening Entry must remain at the root (earliest position).”
• “Stock Opening entry cannot be moved. There are other stock entries (Receipt/Issue/Transfer/Manufacturing) on or before the new date.”
• “Posting date cannot be changed for this stock entry type.”

Valuation vs batch picking — two different things

This trips people up, so it is worth stating plainly:

So you can ship the oldest batch (FIFO) while still valuing it at the weighted-average rate. The two decisions are independent.

Accounting side

Every approved stock movement posts a matching accounting entry, using accounts on the document:

This is why the Stock Balance report and the inventory line on the Balance Sheet agree: they are two views of the same postings.

Where to see valuation

Troubleshooting