Definition of Cost of Goods Sold (or COGS)

Cost of Goods Sold (or COGS) is the total cost of sales for the entire output of a company. It is the sum of the cost of each good sold. This is another crucially important financial figure for analysing a company. COGS includes materials, labour, distribution and generally everything incorporated with every individual unit of output. For projection purposes, COGS is either taken as a percentage of revenue or as an actual calculation from unit sales and unit costs.

In future projections, Prepaid Expenses, Accounts Payable, Inventory and Accrued Expenses can all be assumed to be a percentage of COGS.