{"ok":true,"canonical_url":"https://dealroom.so/glossary/cost-of-goods-sold","api_url":"https://dealroom.so/api/public/glossary/cost-of-goods-sold","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"cost-of-goods-sold","term":"Cost of Goods Sold","group":"Reading the business","definition":"This is the direct cost of producing the goods sold by a business, including raw materials, direct labor, and manufacturing overhead. It's a key factor in gross profit.","what_it_means":"COGS is a critical line item on the Profit and Loss Statement. A high COGS relative to revenue indicates lower gross margins, which impacts the business's overall profitability and cash flow. Analyze COGS trends during due diligence to identify efficiency issues or opportunities for improvement.","url":"https://dealroom.so/glossary/cost-of-goods-sold","official_sources":[],"related":[{"slug":"profit-and-loss-statement","term":"Profit and Loss Statement","url":"https://dealroom.so/glossary/profit-and-loss-statement"},{"slug":"ebitda","term":"EBITDA","url":"https://dealroom.so/glossary/ebitda"},{"slug":"sde","term":"SDE","url":"https://dealroom.so/glossary/sde"},{"slug":"inventory","term":"Inventory","url":"https://dealroom.so/glossary/inventory"}],"related_questions":[{"question":"What are the consequences for a lender if a previously sold guaranteed portion of a loan defaults due to lender error?","url":"https://dealroom.so/for-lenders/questions/what-are-the-consequences-for-a-lender-if-a-previously-sold-guaranteed-portion-of-a-loan-d"},{"question":"What factors primarily influence the premium cost of business life insurance?","url":"https://dealroom.so/sba-7a/questions/what-factors-primarily-influence-the-premium-cost-of-business-life-insurance"},{"question":"Can an SBA 7(a) loan cover the cost of inventory for a business?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-cover-the-cost-of-inventory-for-a-business"},{"question":"Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-business-valuation-or-appraisal"},{"question":"What percentage of the project cost does the SBA typically expect as a down payment?","url":"https://dealroom.so/sba-loans/basics/what-percentage-of-the-project-cost-does-the-sba-typically-expect-as-a-down-payment"},{"question":"Can an SBA 7(a) loan cover the cost of a franchise transfer fee in an acquisition?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-a-franchise-transfer-fee-in-an-acquisition"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Cost of Goods Sold","url":"https://dealroom.so/glossary/cost-of-goods-sold","source_type":"DealRoom Data"}}