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

    Dec 6, 2011, 01:19 AM
    COGS without inventory
    Please help me how can I calculate COGS (cost of revenue) in Income Statement without beginning & ending inventory. I just have data in previous years (2008,2009,2010) but I must calculate cost of revenue for 2011. Revenue in 2011 is 29348.66. Thx
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Dec 6, 2011, 07:44 AM
    The COGS-to-Revenue percentages of the prior years will be the basis of your estimate for 2011. How that historical data is used depends on what assumptions are most reasonable, and your text should furnish the assumption for this case.

    You could, for example, use a simple average of all three years. Or it might be that the most recent year is more representative of today's COGS / Revenue percentage, and so you'd use a weighted average, with 2010 getting the heavier weight in the calculation.

    Or it might be that '08, '09, and '10 show a clear trending of COGS either increasing or decreasing as a % of revenue, and you're told to assume that '11 continues this trend.

    Just some possibilities; your text should tell you the method it wants you to use.
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