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Avago Technologies Ltd (NAS:AVGO)
Cost of Goods Sold
$1,446 Mil (TTM As of Apr. 2014)

Avago Technologies Ltd's cost of goods sold for the three months ended in Apr. 2014 was $344 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Apr. 2014 was $1,446 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Avago Technologies Ltd's Gross Margin for the three months ended in Apr. 2014 was 50.93%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Avago Technologies Ltd's Inventory Turnover for the three months ended in Apr. 2014 was 1.14.


Definition

Cost of goods sold (COGS) refers to the Inventory costs of those goods a business has sold during a particular period.

Avago Technologies Ltd Cost of Goods Sold for the trailing twelve months (TTM) ended in Apr. 2014 was 340 (Jul. 2013 ) + 392 (Oct. 2013 ) + 370 (Jan. 2014 ) + 344 (Apr. 2014 ) = $1,446 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin.

Avago Technologies Ltd's Gross Margin for the three months ended in Apr. 2014 is calculated as:

Gross Margin=(Revenue - Cost of Goods Sold) / Revenue
=(701 - 344) / 701
=50.93 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A company that has a “moat” can usually maintain or even expand their Gross Margin. A company can increase its Gross Margin in two ways. It can increase the prices of the goods it sells and keeps its Cost of Goods Sold unchanged. Or it can keep the sales price unchanged and squeeze its suppliers to reduce the Cost of Goods Sold. Warren Buffett believes businesses with the power to raise prices have “moats”.

Cost of Goods Sold is also directly linked to another concept called Inventory Turnover:

Avago Technologies Ltd's Inventory Turnover for the three months ended in Apr. 2014 is calculated as:

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Inventory Turnover measures how fast the company turns over its inventory within a year. A higher inventory turnover means the company has light inventory. Therefore the company spends less money on storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the company may not have enough to meet demand.

Usually retailers pile up their inventories at holiday seasons to meet the stronger demand. Therefore, the inventory of a particular quarter of a year should not be used to calculate inventory turnover. An average inventory is a better indication.


Related Terms

Inventory, Inventory Turnover, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Avago Technologies Ltd Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13
COGS 0001,1651,0449241,1271,1891,2221,322

Avago Technologies Ltd Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
COGS 293299311319300290340392370344
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