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Lorillard Inc (NYSE:LO)
Cost of Goods Sold
\$4,280 Mil (TTM As of Mar. 2015)

Lorillard Inc's cost of goods sold for the three months ended in Mar. 2015 was \$1,002 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Mar. 2015 was \$4,280 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Lorillard Inc's Gross Margin for the three months ended in Mar. 2015 was 39.93%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Lorillard Inc's Inventory Turnover for the three months ended in Mar. 2015 was 2.33.

Definition

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

Lorillard Inc Cost of Goods Sold for the trailing twelve months (TTM) ended in Mar. 2015 was 1116 (Jun. 2014 ) + 1120 (Sep. 2014 ) + 1042 (Dec. 2014 ) + 1002 (Mar. 2015 ) = \$4,280 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.

Lorillard Inc's Gross Margin for the three months ended in Mar. 2015 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (1668 - 1002) / 1668 = 39.93 %

* 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:

Lorillard Inc's Inventory Turnover for the three months ended in Mar. 2015 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 1002 / 429.5 = 2.33

* 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

Historical Data

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

Lorillard Inc Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 COGS 2,114 2,160 2,307 2,434 3,327 3,809 4,123 4,241 4,231 4,252

Lorillard Inc Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 COGS 1,060 864 1,126 1,158 1,083 973 1,116 1,120 1,042 1,002
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