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GuruFocus has detected 7 Warning Signs with Maxim Integrated Products Inc $MXIM.
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Maxim Integrated Products Inc (NAS:MXIM)
Cost of Goods Sold
$849 Mil (TTM As of Jun. 2017)

Maxim Integrated Products Inc's cost of goods sold for the three months ended in Jun. 2017 was $208 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Jun. 2017 was $849 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Maxim Integrated Products Inc's Gross Margin for the three months ended in Jun. 2017 was 65.39%.

Cost of Goods Sold is also directly linked to Inventory Turnover. Maxim Integrated Products Inc's Inventory Turnover for the three months ended in Jun. 2017 was 0.85.


Definition

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

Maxim Integrated Products Inc Cost of Goods Sold for the trailing twelve months (TTM) ended in Jun. 2017 was 215.664 (Sep. 2016 ) + 210.82 (Dec. 2016 ) + 214.312 (Mar. 2017 ) + 208.339 (Jun. 2017 ) = $849 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.

Maxim Integrated Products Inc's Gross Margin for the three months ended in Jun. 2017 is calculated as:

Gross Margin=(Revenue - Cost of Goods Sold) / Revenue
=(602.005 - 208.339) / 602.005
=65.39 %

* 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:

Maxim Integrated Products Inc's Inventory Turnover for the three months ended in Jun. 2017 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.

Maxim Integrated Products Inc Annual Data

Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16Jun17
COGS 8147978059429539451,0691,035950849

Maxim Integrated Products Inc Quarterly Data

Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17Jun17
COGS 262279276219236219216211214208
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