The Cost of Goods Sold (COGS) Revenue Ratio measures a business’s costs in relation to its sales. This ratio provides insight into how effectively a company is controlling costs and utilizing its resources. It can be calculated by taking the total COGS divided by the total revenue. A lower COGS/revenue ratio is better as it indicates that the company has managed its expenses properly and its products have sold at higher prices. By looking at this ratio, businesses can get an idea of whether their selling prices are too low or their expenses are too high. The COGS Revenue Ratio gives valuable insight to business owners on how to most efficiently run their operations.