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    Contadora's Avatar
    Contadora Posts: 1, Reputation: 1
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    #1

    Feb 24, 2008, 02:44 PM
    Cost of good sold-merchandise company
    What does mean that cost of goods sold is a percentage of sales for a merchandise company?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Feb 24, 2008, 10:51 PM
    Anything "as a percentage" of anything else is always the first divided by the second, regardless of what it is. So cost of goods sold/sales.

    You have to pay for the merchandise you're selling. So a portion of the sales price is your cost (cost of goods sold), and the other portion is the gross profit made on it (i.e. selling price above your cost). You might want either of these as a percent of the sales.

    Say, cost is 40% and therefore gross profit is 60%.
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