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GuruFocus has detected 7 Warning Signs with BHP Billiton Ltd \$BHP.
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BHP Billiton Ltd (NYSE:BHP)
Cost of Goods Sold
\$8,651 Mil (TTM As of Dec. 2016)

BHP Billiton Ltd's cost of goods sold for the six months ended in Dec. 2016 was \$0 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Dec. 2016 was \$8,651 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. BHP Billiton Ltd's Gross Margin for the six months ended in Dec. 2016 was 100%.

Cost of Goods Sold is also directly linked to Inventory Turnover. BHP Billiton Ltd's Inventory Turnover for the six months ended in Dec. 2016 was 0.00.

Definition

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

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. BHP Billiton Ltd Cost of Goods Sold for the trailing twelve months (TTM) ended in Dec. 2016 was \$8,651 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

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

BHP Billiton Ltd's Gross Margin for the six months ended in Dec. 2016 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (18796 - 0) / 18796 = 100 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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:

BHP Billiton Ltd's Inventory Turnover for the six months ended in Dec. 2016 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 0 / 3455 = 0.00

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

BHP Billiton Ltd Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 COGS 17,808 23,546 21,726 20,362 23,217 26,671 25,129 23,385 14,899 8,651

BHP Billiton Ltd Semi-Annual Data

 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 COGS 26,671 0 25,129 0 23,385 0 14,899 0 0 0
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