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GuruFocus has detected 6 Warning Signs with National Grid PLC \$NGG.
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National Grid PLC (NYSE:NGG)
Cost of Goods Sold
\$15,712 Mil (TTM As of Sep. 2016)

National Grid PLC's cost of goods sold for the six months ended in Sep. 2016 was \$7,113 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Sep. 2016 was \$15,712 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. National Grid PLC's Gross Margin for the six months ended in Sep. 2016 was 24.85%.

Cost of Goods Sold is also directly linked to Inventory Turnover. National Grid PLC's Inventory Turnover for the six months ended in Sep. 2016 was 13.36.

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. National Grid PLC Cost of Goods Sold for the trailing twelve months (TTM) ended in Sep. 2016 was \$15,712 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.

National Grid PLC's Gross Margin for the six months ended in Sep. 2016 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (9465.17739816 - 7113.00919842) / 9465.17739816 = 24.85 %

* 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:

National Grid PLC's Inventory Turnover for the six months ended in Sep. 2016 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 7113.00919842 / 532.351718948 = 13.36

* 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.

National Grid PLC Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 COGS 12,189 12,722 14,856 12,226 17,121 16,286 15,995 18,395 17,072 15,712

National Grid PLC Semi-Annual Data

 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 COGS 8,669 6,995 9,454 8,232 9,781 7,700 10,004 7,676 8,583 7,113
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