The Cost of Goods Sold (COGS) to Sales Ratio is a key performance indicator for businesses. It measures how effectively a company turns its inventory into sales, by looking at the proportion of revenues generated from the cost of goods sold. A low ratio means that a business is spending more on raw materials and labor than it needs to, resulting in lower profits. Companies can use this information to optimize their supply chain and make better decisions about purchasing and production levels. By improving their COGS to Sales Ratio, they can increase their profit margins while still offering high-quality products to customers.