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Saturday, June 11, 2011

COGS to Sales Ratio

Definition: The cost of goods sold (COGS) to sales ratio shows the percentage of sales revenue used to pay for expenses which vary directly with sales.

Formula:

COGS to Sales ratio = Cost of Goods Sold / Sales

Example 1:
BPP Ltd. has cost of sales $100,000, sales for the year $200,000, sales returns $80,000. Then,
 Net sales = 200,000 - 80,000 = $120,000
 COGS to Sales ratio = 100,000 /

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