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GuruFocus has detected 6 Warning Signs with Petroleo Brasileiro SA Petrobras \$PBR.
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Petroleo Brasileiro SA Petrobras (NYSE:PBR)
Cost of Goods Sold
\$56,100 Mil (TTM As of Sep. 2016)

Petroleo Brasileiro SA Petrobras's cost of goods sold for the three months ended in Sep. 2016 was \$14,506 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Sep. 2016 was \$56,100 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Petroleo Brasileiro SA Petrobras's Gross Margin for the three months ended in Sep. 2016 was 33.13%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Petroleo Brasileiro SA Petrobras's Inventory Turnover for the three months ended in Sep. 2016 was 1.67.

Definition

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

Petroleo Brasileiro SA Petrobras Cost of Goods Sold for the trailing twelve months (TTM) ended in Sep. 2016 was 15160 (Dec. 2015 ) + 12616 (Mar. 2016 ) + 13818 (Jun. 2016 ) + 14506 (Sep. 2016 ) = \$56,100 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.

Petroleo Brasileiro SA Petrobras's Gross Margin for the three months ended in Sep. 2016 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (21693 - 14506) / 21693 = 33.13 %

* 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:

Petroleo Brasileiro SA Petrobras's Inventory Turnover for the three months ended in Sep. 2016 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 14506 / 8696.5 = 1.67

* 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.

Petroleo Brasileiro SA Petrobras Annual Data

 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 COGS 40,184 49,789 72,865 50,953 77,145 99,595 108,276 108,834 109,477 67,485

Petroleo Brasileiro SA Petrobras Quarterly Data

 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 COGS 30,855 29,859 23,672 18,140 17,701 16,484 15,160 12,616 13,818 14,506
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