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The largest expense on a retailer's income statement is typically: Cost of goods sold Cost of goods sold formula Net Purchases + beginning inventory - ending inventory. FOB destination The seller holds title until the merchandise is received at the buyer's location. FOB shipping The seller transfers title to the buyer once the merchandise is shipped. Gross Profit Sales-sales return-cost of goods sold Operating Income Net sales-cost of goods sold-operating expenses Gross profit ratio [Net sales-cost of goods sold]/Net sales Inventory Turnover ratio Cost of goods sold/average inventory Average days in inventory 365/inventory turnover ratio Gross profit ratio [Gross profit/net sales]*100 FIFO The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system