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GuruFocus has detected 3 Warning Signs with Accenture PLC \$ACN.
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Accenture PLC (NYSE:ACN)
Gross Profit
\$10,579 Mil (TTM As of Feb. 2017)

Accenture PLC's gross profit for the three months ended in Feb. 2017 was \$2,504 Mil. Accenture PLC's gross profit for the trailing twelve months (TTM) ended in Feb. 2017 was \$10,579 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Accenture PLC's gross profit for the three months ended in Feb. 2017 was \$2,504 Mil. Accenture PLC's revenue for the three months ended in Feb. 2017 was \$8,762 Mil. Therefore, Accenture PLC's Gross Margin for the quarter that ended in Feb. 2017 was 28.58%.

Accenture PLC had a gross margin of 28.58% for the quarter that ended in Feb. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Accenture PLC was 31.40%. The lowest was 28.16%. And the median was 29.99%.

Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Accenture PLC's Gross Profit for the fiscal year that ended in Aug. 2016 is calculated as

 Gross Profit (A: Aug. 2016 ) = Revenue - Cost of Goods Sold = 34797.661 - 24520.234 = 10,277

Accenture PLC's Gross Profit for the quarter that ended in Feb. 2017 is calculated as

 Gross Profit (Q: Feb. 2017 ) = Revenue - Cost of Goods Sold = 8762.182 - 6258.026 = 2,504

Accenture PLC Gross Profit for the trailing twelve months (TTM) ended in Feb. 2017 was 2689.552 (May. 2016 ) + 2655.54 (Aug. 2016 ) + 2730.032 (Nov. 2016 ) + 2504.156 (Feb. 2017 ) = \$10,579 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Accenture PLC's Gross Margin for the quarter that ended in Feb. 2017 is calculated as

 Gross Margin (Q: Feb. 2017 ) = Gross Profit (Q: Feb. 2017 ) / Revenue (Q: Feb. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 2,504 / 8762.182 = 28.58 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.

Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Accenture PLC had a gross margin of 28.58% for the quarter that ended in Feb. 2017 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Accenture PLC Annual Data

 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Gross_Profit 6,041 7,186 6,841 7,251 8,387 8,988 9,384 9,684 9,809 10,277

Accenture PLC Quarterly Data

 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 Gross_Profit 2,539 2,241 2,525 2,504 2,563 2,370 2,690 2,656 2,730 2,504
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