Skip to content
Miraç Özdemir
Income Statement & Profitability

Cost of Goods Sold (COGS) Calculator and Gross Profit

Calculates cost of goods sold (COGS), gross profit on sales and inventory turnover from opening inventory, purchases, purchase returns, purchase costs and closing inventory.

Version 1

Things to keep in mind:

  • The valuation method of closing inventory (weighted average, FIFO) directly affects COGS; this tool does not value inventory.
  • Manufacturers must also include production cost and the change in work in progress for the cost of products sold; use the Production Cost tool.
  • Waste, shrinkage and write-downs are not modelled separately.
  • This tool is for information only and does not replace bookkeeping or professional accounting advice.

Calculator

Inventory and purchases (excluding VAT)

TRY

Merchandise inventory brought forward from the previous period.

TRY

Invoice amount of merchandise bought in the period (excluding VAT).

TRY

Goods returned to suppliers and discounts received.

TRY

Freight, insurance, customs and similar costs of the goods.

TRY

Closing inventory after count and valuation.

Sales

TRY

Net sales of the period for gross profit (optional).

After the first calculation, the result updates automatically when you change a value.

Result

Enter the values and press Calculate to see the result here.

About this tool

Cost of goods sold (COGS) is what the merchandise sold in a period cost the business; in the income statement it is deducted from net sales to reach gross profit. Under the periodic inventory method COGS is found after the year-end count:

Formulas

  • Net purchases = Purchases − Purchase returns and discounts + Purchase costs (freight, insurance, customs, etc.)
  • Goods available for sale = Opening inventory + Net purchases
  • COGS = Goods available for sale − Closing inventory
  • Gross profit = Net sales − COGS; Gross margin = Gross profit / Net sales × 100
  • Inventory turnover = COGS / Average inventory, with average inventory = (Opening + Closing inventory) / 2; Days in inventory = 365 / Inventory turnover

Example: with opening inventory of 200,000 TRY, purchases of 1,000,000 TRY, purchase returns of 50,000 TRY and inbound freight of 30,000 TRY, net purchases are 980,000 TRY and goods available for sale 1,180,000 TRY. If the count values closing inventory at 280,000 TRY, COGS is 900,000 TRY. With net sales of 1,400,000 TRY, gross profit is 500,000 TRY and the gross margin 35.71%. Average inventory is 240,000 TRY, so inventory turnover is 3.75 and days in inventory about 97.

In the Turkish uniform chart of accounts this is account 621 (cost of merchandise sold). Adding purchase costs to cost follows the definition of cost in Tax Procedure Law (VUK) article 262. The valuation method of closing inventory (weighted average, FIFO) directly affects the result; this tool takes the valued closing inventory as an input.

How to use

  1. Enter opening inventory (the previous period's closing inventory).
  2. Enter purchases in the period and any purchase returns, discounts and purchase costs.
  3. Enter closing inventory after the count and valuation.
  4. For gross profit enter net sales, then press Calculate.

Notes

Amounts are rounded to the cent, ratios to 2 decimals and days to 1 decimal (HALF_UP). Without net sales, gross profit and the margins show 0. A negative COGS means closing inventory was entered above goods available for sale; check the inputs (turnover then shows 0). Enter amounts excluding VAT; deductible VAT is not part of cost.

Sources

Frequently asked questions

4 questions

  1. COGS = Opening inventory + Net purchases − Closing inventory. Net purchases are purchases less returns and discounts plus purchase costs (freight, insurance, customs).

Next step

Related tools to continue your calculation.

All tools in Income Statement & Profitability