COGS as a Percentage of Revenue
Cost of Goods Sold (COGS) represents the expenses involved in purchasing raw materials and manufacturing finished products. Calculating COGS as a percentage of revenue helps measure cost efficiency and compare organizational performance to industry standards.
NetSuite calculates COGS as a percentage of revenue using the following formula:
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COGS as a Percentage of Revenue |
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(Cost of goods sold (COGS) / Total business entity revenue) * 100 |
The result is displayed as a percentage with two decimal places.
For example, Company A has $20,000,000 revenue for a year and the COGS for the year is $12,500,000. To calculate COGS as a percentage of revenue:
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COGS as a Percentage of Revenue |
= |
($12,500,000 / $20,000,000) * 100 |
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0.625 * 100 |
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62.5% |