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Balance sheet accounts payable cogs3/18/2024 ![]() You can calculate the cost of goods sold by using the following formula: What Is the Cost of Goods Sold Formula? Method One As you can see, calculating your COGS correctly is critical to running your business. It can also impact your borrowing ability when you are ready to scale up your business. Poor assessment of your COGS can impact how much tax you’ll pay or overpay. Are you able to increase staff wages? Do you need a cheaper location? Can you afford to update tools or renovate your business space? These are all questions where the answer is determined by accurately assessing your COGS. But it also helps determine how efficiently you are running your business. It helps you set prices, determine if you need to change suppliers, and identify profit loss margins. ![]()
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