Glossary · Reading the business
In short
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.
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.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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