Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Cost of Goods Sold (COGS)

Definition

Direct costs or expenses for producing the goods or services sold by a company.

Examples

Examples include the cost of food for a restaurant or the cost of merchandise for a retail business. This is often called “cost of services” for service-based companies. To calculate the gross profit or gross profit margin, simply deduct the cost of goods sold from revenue. All expenses in the cost of goods sold section of the profit & loss statement should be variable expenses.

See Also

Fixed expenses, gross profit, variable expenses.