COGS Used in Other Formulas
Posted: Wed Feb 12, 2025 6:05 am
The cost of goods sold is also a great way to calculate your inventory turnover. It shows how often you sell and replace your inventory, reflecting the production level and sell-through. You can also calculate the gross margin using COGS.
Inventory Turnover Ratio = Cost of goods sold / Average Inventory
Significance of COGS
COGS is a critical metric in any business. Some of the benefits of this are:
COGS can help determine whether to increase the selling prices of your products.
Based on the COGS, you can decide to change your supplier for a cheaper one.
COGS is also your go-to metric when you’re trying to see how your peru phone number list business is performing. It helps you know if you’re making profits or just striving through.
It helps you decide on various things like:
Affordability of giving your employees a raise
Moving to a cheaper location
Splurging on some fancy new equipment or giving your shop a makeover
If you mess up your COGS calculations, you’ll potentially be overpaying on taxes or even dampening your chances of getting a loan when you’re ready to take your business to the next level. So, getting it right is important.
Inventory Turnover Ratio = Cost of goods sold / Average Inventory
Significance of COGS
COGS is a critical metric in any business. Some of the benefits of this are:
COGS can help determine whether to increase the selling prices of your products.
Based on the COGS, you can decide to change your supplier for a cheaper one.
COGS is also your go-to metric when you’re trying to see how your peru phone number list business is performing. It helps you know if you’re making profits or just striving through.
It helps you decide on various things like:
Affordability of giving your employees a raise
Moving to a cheaper location
Splurging on some fancy new equipment or giving your shop a makeover
If you mess up your COGS calculations, you’ll potentially be overpaying on taxes or even dampening your chances of getting a loan when you’re ready to take your business to the next level. So, getting it right is important.