POST #4: FINANCIAL MODELING 101: COGS
The Cost of Goods Sold (COGS) is directly tied to the revenue a firm generates. When building a financial model, tracking all expenses contributing to revenue is essential. Common COGS line items include raw materials, inventory, and direct production costs like shipping and labor.
For example, raw materials can include laptops or software essential for production. COGS is calculated differently across industries, such as "Cost of Revenue" in services. Accurately calculating COGS helps determine the true cost per unit and gross profit, key to long-term success.
Envol Capital specializes in building detailed financial models to help clients optimize operations. Contact us for valuation or acquisition services.