COGS stands for Cost of Goods Sold and it refers to the direct costs incurred in producing the goods or services that a company sells. This is an important figure for businesses to track as it helps them to monitor how much money they are making off of their products and services. It also can provide insight into the efficiency of their production process, which can help inform decisions about future investments. COGS is essential for companies trying to measure profitability and improve overall performance.