Cost of sales in the financial statements
Cost of sales is an income-statement line item: a total for a period, with a debit balance in the ledger.
Cost of sales in Business Central
How the accounts are selected
- Category Cost of Goods Sold (26) and every category below it
- Plus 3 accounts assigned directly: 50310 Project Costs, 50320 Project Cost Applied, 50410 Purchase Variance, Retail
10 posting accounts in total.
Posting accounts
- 50001 TOTAL COST OF GOODS SOLD
- 50100 Cost of Goods
- 50200 Cost of Resources
- 50310 Project Costs
- 50320 Project Cost Applied
- 50400 Subcontracted work
- 50410 Purchase Variance, Retail
- 50500 Cost of Variances
Metrics using cost of sales
- Basic Earning Power (through another metric): EBIT ÷ average total assets
- Debt to EBIT (through another metric): Financial debt ÷ EBIT
- EBIT (through another metric): Operating Profit + Other income and expenses, net
- Free Cash Flow to Firm (through another metric): EBIT − Income tax − change in non-current assets − change in Trade Working Capital
- Interest Coverage Ratio (through another metric): EBIT ÷ Interest expense
- Inventory Turnover: Cost of sales ÷ average inventory
- Operating Profit: Revenue − Cost of sales − Operating expenses
- Return on Capital Employed (through another metric): EBIT ÷ (average total assets − average current liabilities)
- Return on Sales (through another metric): Operating Profit ÷ Revenue