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Electro Rent Corp  (NAS:ELRC) Cost of Goods Sold: \$67.3 Mil (TTM As of Feb. 2016)

Electro Rent Corp's cost of goods sold for the three months ended in Feb. 2016 was \$10.6 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Feb. 2016 was \$67.3 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Electro Rent Corp's Gross Margin % for the three months ended in Feb. 2016 was 73.21%.

Cost of Goods Sold is also directly linked to Inventory Turnover.

Historical Data

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

Electro Rent Corp Annual Data

 May06 May07 May08 May09 May10 May11 May12 May13 May14 May15 Cost of Goods Sold 96.66 105.57 98.68 93.04 99.64

Electro Rent Corp Quarterly Data

 May11 Aug11 Nov11 Feb12 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 Cost of Goods Sold 24.14 25.82 19.78 11.09 10.58

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 Feb. 2016 was 25.817 (May. 2015 ) + 19.778 (Aug. 2015 ) + 11.089 (Nov. 2015 ) + 10.582 (Feb. 2016 ) = \$67.3 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.

Electro Rent Corp's Gross Margin % for the three months ended in Feb. 2016 is calculated as:

 Gross Margin % = (Revenue - Cost of Goods Sold) / Revenue = (39.498 - 10.582) / 39.498 = 73.21 %

* 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:

Electro Rent Corp's Inventory Turnover for the three months ended in Feb. 2016 is calculated as:

 Inventory Turnover = Cost of Goods Sold / Total Inventories = 10.582 / 0 = N/A

* 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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