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GuruFocus has detected 5 Warning Signs with The Valspar Corp $VAL.
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The Valspar Corp (NYSE:VAL)
Cost of Goods Sold
$2,655 Mil (TTM As of Oct. 2016)

The Valspar Corp's cost of goods sold for the three months ended in Oct. 2016 was $712 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Oct. 2016 was $2,655 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. The Valspar Corp's Gross Margin for the three months ended in Oct. 2016 was 35.58%.

Cost of Goods Sold is also directly linked to Inventory Turnover. The Valspar Corp's Inventory Turnover for the three months ended in Oct. 2016 was 1.43.


Definition

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

The Valspar Corp Cost of Goods Sold for the trailing twelve months (TTM) ended in Oct. 2016 was 567.129 (Jan. 2016 ) + 655.356 (Apr. 2016 ) + 719.995 (Jul. 2016 ) + 712.488 (Oct. 2016 ) = $2,655 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.

The Valspar Corp's Gross Margin for the three months ended in Oct. 2016 is calculated as:

Gross Margin=(Revenue - Cost of Goods Sold) / Revenue
=(1106.057 - 712.488) / 1106.057
=35.58 %

* 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:

The Valspar Corp's Inventory Turnover for the three months ended in Oct. 2016 is calculated as:

* 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

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 local exchange's currency.

The Valspar Corp Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
COGS 2,2772,5051,9002,1552,7212,6672,8373,0872,8412,655

The Valspar Corp Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
COGS 813839681686738736567655720712
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