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GuruFocus has detected 4 Warning Signs with National Grid PLC $NGG.
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National Grid PLC (NYSE:NGG)
Cost of Goods Sold
$14,601 Mil (TTM As of Mar. 2017)

National Grid PLC's cost of goods sold for the six months ended in Mar. 2017 was $7,919 Mil. Its cost of goods sold for the trailing twelve months (TTM) ended in Mar. 2017 was $14,601 Mil.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. National Grid PLC's Gross Margin for the six months ended in Mar. 2017 was 18.11%.

Cost of Goods Sold is also directly linked to Inventory Turnover. National Grid PLC's Inventory Turnover for the six months ended in Mar. 2017 was 16.56.


Definition

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

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. National Grid PLC Cost of Goods Sold for the trailing twelve months (TTM) ended in Mar. 2017 was $14,601 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.

National Grid PLC's Gross Margin for the six months ended in Mar. 2017 is calculated as:

Gross Margin=(Revenue - Cost of Goods Sold) / Revenue
=(9669.13580247 - 7918.51851852) / 9669.13580247
=18.11 %

* 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:

National Grid PLC's Inventory Turnover for the six months ended in Mar. 2017 is calculated as:

Inventory Turnover=Cost of Goods Sold / Average Inventory
=7918.51851852 / 478.220664817
=16.56

* 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.

National Grid PLC Annual Data

Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16Mar17
COGS 12,72214,85616,13617,12116,29316,00318,39515,55514,22614,601

National Grid PLC Semi-Annual Data

Sep12Mar13Sep13Mar14Sep14Mar15Sep15Mar16Sep16Mar17
COGS 6,9989,4598,2329,7817,7008,4877,6767,0977,1137,919
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