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Airgas Inc  (NYSE:ARG) Cost of Goods Sold: \$2,302 Mil (TTM As of Mar. 2016)

Airgas Inc's cost of goods sold for the three months ended in Mar. 2016 was \$550 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Mar. 2016 was \$2,302 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Airgas Inc's Gross Margin % for the three months ended in Mar. 2016 was 57.52%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Airgas Inc's Inventory Turnover for the three months ended in Mar. 2016 was 1.16.

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Airgas Inc Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Cost of Goods Sold 2,175.43 2,220.61 2,247.57 2,355.88 2,301.60

Airgas Inc Quarterly Data

 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Cost of Goods Sold 583.00 597.17 601.17 553.58 549.68

Calculation

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

Cost of Goods Sold for the trailing twelve months (TTM) ended in Mar. 2016 was 597.166 (Jun. 2015 ) + 601.173 (Sep. 2015 ) + 553.582 (Dec. 20 ) + 549.677 (Mar. 2016 ) = \$2,302 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.

Airgas Inc's Gross Margin % for the three months ended in Mar. 2016 is calculated as:

 Gross Margin % = (Revenue - Cost of Goods Sold) / Revenue = (1294.084 - 549.677) / 1294.084 = 57.52 %

* 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:

Airgas Inc's Inventory Turnover for the three months ended in Mar. 2016 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Total Inventories = 549.677 / 472.3755 = 1.16

* 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.

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