Financial Statements
Cost of Goods Sold
The direct cost of producing or buying the goods a company sells.
Also called: COGS, cost of sales
What it means
Cost of goods sold, often called COGS, includes the direct costs tied to the products a company sells, such as materials and direct labor. It does not usually include all operating expenses like marketing or corporate overhead.
Why it matters
COGS affects gross profit and helps users see whether the business can sell its products at healthy margins.