COGS

Cost of goods sold: what the items you sold cost you.

Also known as: Cost of goods sold

COGS (cost of goods sold) is the cost of the inventory you sold during a period. It is the purchase or production cost of the items you sold, not the revenue they brought in.

Why it matters for inventory

COGS is the numerator of inventory turnover and a core input to gross profit. If your records do not track item cost, COGS becomes a guess, and every ratio built on it is unreliable.

Keeping it simple

For a small operation, a single cost per item is enough:

COGS = units sold × unit cost

You do not need full accounting valuation to run a warehouse well. You need a cost on each item and an accurate record of what moved. Avoid mixing landed cost, freight, and discounts until the basics are right.

Once costs are in place, see how fast they turn with the inventory turnover calculator.