Glossary
Cost of goods sold
Cost of goods sold (COGS) is the direct cost of producing or buying the products a business actually sold during a period, including materials and direct labour. Subtracting it from revenue gives gross profit, the first measure of whether the core offering pays its way. Accurate COGS depends on disciplined bookkeeping that separates direct product costs from general overheads, which can otherwise distort margins in inventory-heavy businesses.
Related reading