From COGS to cos, you'll be speaking fluent #finance in no time.
Aussies use a lot of slang.
Indeed, if you've moved here recently, you'll have stumbled your way through “arvo”, “tinnies” and “devo”.
Meanwhile, hop online, and every day a new "ELI5" (explain it like I'm 5) to "GRWM" (get ready with me) acronym emerges from the language ashes.
COGS is just the GRWM of a company balance sheet
It’s a similar story in finance. When talking about business, people cut concepts down. It can sound like a secret language, but we promise it’s not that hard.
COGS and cos
COGS stands for “cost of goods sold”. It's interchangeable with cos, which stands for “cost of sales”.
In a company’s financial results, you’ll find this bad boy below “revenue” but above “profit”.
In a business, you're selling a thing. What someone is willing to pay for that thing, be it shoes, makeup, or a packet of Tim Tams, goes towards your revenue.
Revenue vs COGS
Let's say you sell that packet of Tim Tams for $4.50. Cool! We just made $4.50!
Yeah, cool. But a company doesn't keep every dollar of that.
They actually have to make those biccies.
Breaking down costs
For that, you've got to get flour, sugar, yummy mystery chocolate stuff, and of course, someone makes the magic happen with time and effort, so labour. For fun, let's say all that costs $3.50 per packet of Tim Tams. That's your COGS.
Costs of goods sold, aka cos.
You made $4.50, but it cost you $3.50 to make that $4.50.
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