ACCOUNTING GLOSSARY
COGS
Cost of Goods Sold
Direct costs attributable to producing or acquiring goods sold.
What does COGS mean?
Direct costs attributable to producing or acquiring goods sold. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
COGS in context
A distributor selling $1 million of products acquired for $650,000 reports $650,000 COGS.
Why it matters in financing
COGS can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related accounting terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.