COGS

Cost of Goods Sold

Short definition

COGS is the direct cost of goods or services sold. Inventory movement, production cost and, depending on policy, manufacturing depreciation sit here — not opex.

Detailed explanation

In trading, COGS is mainly purchase cost and inventory change. In manufacturing, materials, direct labour and overhead hit unit cost; volume variance breaks gross margin. In services, “cost of sales” may be staff and subcontractors.

Inventory method and FX shift COGS across periods. Shrinkage and write-downs may sit in COGS or in a provision; cash timing differs.

Why it matters for the CFO

The pricing floor and inventory financing hang on COGS. Rising COGS plus rising DIO grows the cash need faster than sales.

How it is calculated

COGS = Dönem başı stok + Alış/üretim − Dönem sonu stok (ticaret/üretim sadeleştirilmiş)

Variables in the formula

• COGS: Cost of goods sold
• Inventory: Inventory change

How to read it

COGS / sales is the complement of gross margin. Input shock, waste, or costing method? If manufacturing depreciation is in COGS, the EBITDA bridge must be built accordingly.

Numerical example

Opening inventory 70 mn TL, purchases 250 mn TL, closing inventory 60 mn TL → COGS = 70 + 250 − 60 = 260 mn TL.

Definitions are educational. They are not investment, credit or tax advice.