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Average cost and stock valuation
Cost is updated by submitted purchase invoices alone. Nothing else touches it.
How does Pashkateb calculate stock cost?
By weighted average. Every time you submit a purchase invoice, the system recalculates the average cost of each item on it.
Three different numbers
| Number | Who sets it | Used for |
|---|---|---|
| Sales price | You | Filled in automatically on sales invoices |
| Purchase price | You | A reference, and a fallback when there is no average |
| Average cost | The system | Valuing stock in reports |
Purchase price ≠ average cost. The first is a reference you type on the item card. The second is calculated from your actual invoices.
The formula
On submitting a purchase invoice, for each item:
new average = (old balance x old cost) + (new quantity x new purchase price)
──────────────────────────────────────────────────────────────
old balance + new quantity
An example
You hold 100 units at a cost of 10 EGP, and buy 50 units at 16 EGP:
(100 x 10) + (50 x 16) 1000 + 800 1800
────────────────────── = ────────── = ──── = 12 EGP
100 + 50 150 150
The average cost becomes 12 EGP across all 150 units.
What changes cost and what does not
| Operation | Changes average cost? |
|---|---|
| Submitting a purchase invoice | ✅ Yes |
| Submitting a sales invoice | ❌ No |
| A return invoice (sales or purchase) | ❌ No |
| A stock adjustment | ❌ No |
| A warehouse transfer | ❌ No |
| Editing the purchase price on the item card | ❌ No |
A submitted purchase invoice is the only source.
An important practical consequence
Because cost is only updated by purchases, a wrong price on a submitted purchase invoice pollutes everything downstream:
- Your stock evaluation report shows the wrong figures.
- The valuation rate on stock adjustments is wrong.
- Any profitability calculation built on cost is wrong.
Check purchase prices before submitting. The only correction afterwards is a purchase return followed by a new invoice at the right price.
The valuation rate in reports
Reports value stock at average cost, falling back to the item's purchase price when there is no average.
So an item you have never bought on a submitted invoice is valued at the purchase price you typed by hand — keep that number realistic even though it is only a reference.
Profit is not in the postings
A Pashkateb sales invoice posts no cost-of-goods-sold entry. So your margin will not be visible from the sales postings in the general ledger.
To understand your profit, use the sales and cost reports together:
- Stock Evaluation — what your stock is worth at cost.
- Monthly Sales Summary — your revenue.
- Profit and Loss — the overall financial picture.
Tip
Submit purchase invoices in the order you received the goods. Submitting an older invoice after a newer one calculates the weighted average in the wrong sequence and gives you a figure that does not match reality.
Frequently Asked Questions
What is the difference between purchase price and average cost?
Purchase price is a reference number you type on the item card. Average cost is calculated by the system from submitted purchase invoices, and it is what reports use to value your stock.
What changes average cost?
Submitting a purchase invoice, and nothing else. Sales invoices, return invoices, stock adjustments and warehouse transfers all leave average cost untouched.
Can I edit average cost by hand?
No. There is no field for it. If your cost is wrong, the cause is a wrong purchase price on a submitted invoice — and the fix is a purchase return followed by a new invoice at the right price.
Why can I not see my profit in the sales postings?
Because a Pashkateb sales invoice posts no cost-of-goods-sold entry. You work out margin from the sales and cost reports rather than from sales postings alone.
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