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Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.
A good purchased as a "raw material" goes into the manufacture of a product. A good only partially completed during the manufacturing process is called "work in process". When the good is completed as to manufacturing but not yet sold or distributed to the end-user, it is called a "finished good".
This is the last stage for the processing of goods. The goods are ready to be consumed or distributed. There is no processing required in term of the goods after this stage by the seller. Though there maybe instance that seller finished goods become buyer’s raw materials.
Calculating the finished goods inventory for a manufacturing company requires the use of a simple mathematical formula that depends on a few of the company’s inventory and production records to complete.