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Walgreen Co (NYSE:WAG)
Cost of Goods Sold
\$54,823 Mil (TTM As of Aug. 2014)

Walgreen Co's cost of goods sold for the three months ended in Aug. 2014 was \$13,730 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Aug. 2014 was \$54,823 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Walgreen Co's Gross Margin for the three months ended in Aug. 2014 was 27.95%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Walgreen Co's Inventory Turnover for the three months ended in Aug. 2014 was 2.19.

Definition

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

Walgreen Co Cost of Goods Sold for the trailing twelve months (TTM) ended in Aug. 2014 was 13177 (Nov. 2013 ) + 13955 (Feb. 2014 ) + 13961 (May. 2014 ) + 13730 (Aug. 2014 ) = \$54,823 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.

Walgreen Co's Gross Margin for the three months ended in Aug. 2014 is calculated as:

 Gross Margin = (Revenue - Cost of Goods Sold) / Revenue = (19057 - 13730) / 19057 = 27.95 %

* 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:

Walgreen Co's Inventory Turnover for the three months ended in Aug. 2014 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Average Inventory = 13730 / 6257.5 = 2.19

* 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.

Walgreen Co Annual Data

 Aug05 Aug06 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 COGS 30,414 34,240 38,518 42,391 45,722 48,444 51,692 51,291 51,098 54,823

Walgreen Co Quarterly Data

 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 COGS 12,738 12,238 12,217 13,040 13,091 12,750 13,177 13,955 13,961 13,730
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