RobertA

The equation will be simple if you read 'COGS' as 'Sales.'

Say ,at beginning of year i had 1 pen, i bought 4 more pens during the year , and at the end of year i have only 2 pens remaining. So, i have sold 3 pens during the year. Right? (i.e,4+1=5-2=3).

Here, 3 will be my sales ( read as COGS). ( Actually COGS = Sales - profit)

Hope this clears the equation.