What is the average inventory value for the year?

• A. €425
• B. €475
• C. €500
• D. €525

Answer: (B)

Average inventory value for a year is usually found by taking the simple midpoint between the stock at the start and at the end of the period. This approach, (Opening stock + Closing stock) / 2, gives a good sense of the level of inventory averaged over the year when changes are relatively steady.

If the opening balance is €450 and the closing balance is €500, the calculation is (450 + 500) / 2 = 950 / 2 = €475. So €475 is the figure that results from applying this standard method to those start and end balances.

Other numbers would only be correct if the opening and closing balances were different, or if a different averaging method (like a monthly average or a weighted flow approach) were appropriate for the data you have. In the typical year-end simple-average context, €475 is the correct result.