Cost of Goods Sold (COGS) is a measure of the direct costs of producing the goods sold by a company. This includes material costs, direct labor costs, and other direct production costs. It does not include indirect expenses such as distribution costs and sales force costs. Operating Expenses are all the necessary expenses that a business incurs in order to keep its operations running. This includes rent, utilities, payroll, insurance, advertising, taxes, legal fees, and more. Operating expenses don’t include capital expenditures, which are used to purchase fixed assets like buildings and machinery. COGS is an important metric for assessing a business’s profitability, while operating expenses provide valuable insights into a business’s overall efficiency.