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Cost of Goods Sold (COGS) Calculator

Just enter beginning inventory, purchases, and ending inventory to instantly calculate your cost of goods sold. Add sales revenue and it also works out gross profit, cost ratio, and gross margin.

Input

$
$
$
$

Enter sales revenue to also calculate gross profit, cost ratio, and gross margin.

Result

Cost of goods sold

$2,800,000.00

Beginning inventory + Purchases − Ending inventory

Gross profit

$2,200,000.00

Cost ratio

56.0 %

Gross margin

44.0 %

Calculation breakdown

Beginning inventory$500,000.00
+ Purchases$3,000,000.00
− Ending inventory$700,000.00
= Cost of goods sold$2,800,000.00
Sales revenue$5,000,000.00
Gross profit$2,200,000.00

How it works

  • Cost of goods sold is calculated as "beginning inventory + purchases − ending inventory." Beginning and ending inventory are the value of stock (goods or products) on hand at the start and end of the period.
  • When you enter sales revenue, gross profit is calculated as sales revenue − cost of goods sold. Gross profit is a basic measure of how much your core business earns.
  • The cost ratio is found with "cost of goods sold ÷ sales revenue × 100." A lower figure means costs are kept down relative to sales.
  • The gross margin (gross profit ratio) is found with "gross profit ÷ sales revenue × 100," and the cost ratio plus the gross margin add up to roughly 100%.
  • This tool uses the basic formula for a retail (buy-and-resell) business. In manufacturing, the cost of goods manufactured is used instead of purchases, so the treatment can differ by industry and accounting method.
  • Note: the amounts and ratios shown are estimates derived from your inputs. The actual cost of goods sold for accounting and tax purposes may differ depending on inventory valuation methods, accounting standards, and each business's treatment. Please confirm official figures with a tax accountant or accounting firm.