What does COGS stand for in retail terms?

In retail, COGS stands for Cost of Goods Sold. This term is essential for understanding a business's financial performance as it represents the direct costs attributable to the production of the goods that a company sells during a specific period. This calculation typically includes the cost of materials, labor directly involved in production, and any other expenses directly tied to the creation of the goods sold.

Understanding COGS is crucial for retailers because it helps to determine gross profit when subtracted from total revenues. Gross profit then is a key indicator of the company's financial health, as it shows the efficiency in managing production costs relative to sales.

The other terms presented do not accurately reflect common retail terminology. "Cost of Goods Set" is not a recognized financial metric in retail, while "Customer Order Goods Sold" and "Capital of Goods Sold" misunderstand the concept of COGS and do not convey the financial implications that come with managing costs of inventory and sales.