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Applied Materials Inc (NAS:AMAT)
Gross Profit
$4,071 Mil (TTM As of Jul. 2016)

Applied Materials Inc's gross profit for the three months ended in Jul. 2016 was $1,192 Mil. Applied Materials Inc's gross profit for the trailing twelve months (TTM) ended in Jul. 2016 was $4,071 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Applied Materials Inc's gross profit for the three months ended in Jul. 2016 was $1,192 Mil. Applied Materials Inc's revenue for the three months ended in Jul. 2016 was $2,821 Mil. Therefore, Applied Materials Inc's Gross Margin for the quarter that ended in Jul. 2016 was 42.25%.

Applied Materials Inc had a gross margin of 42.25% for the quarter that ended in Jul. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Applied Materials Inc was 46.15%. The lowest was 28.54%. And the median was 41.19%.


Definition

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

Applied Materials Inc's Gross Profit for the fiscal year that ended in Oct. 2015 is calculated as

Gross Profit (A: Oct. 2015 )=Revenue - Cost of Goods Sold
=9659 - 5707
=3,952

Applied Materials Inc's Gross Profit for the quarter that ended in Jul. 2016 is calculated as

Gross Profit (Q: Jul. 2016 )=Revenue - Cost of Goods Sold
=2821 - 1629
=1,192

Applied Materials Inc Gross Profit for the trailing twelve months (TTM) ended in Jul. 2016 was 959 (Oct. 2015 ) + 916 (Jan. 2016 ) + 1004 (Apr. 2016 ) + 1192 (Jul. 2016 ) = $4,071 Mil.

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

Applied Materials Inc's Gross Margin for the quarter that ended in Jul. 2016 is calculated as

Gross Margin (Q: Jul. 2016 )=Gross Profit (Q: Jul. 2016 ) / Revenue (Q: Jul. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,192 / 2821
=42.25 %

* 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

Applied Materials Inc had a gross margin of 42.25% for the quarter that ended in Jul. 2016 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

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

Applied Materials Inc Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
Gross_Profit 4,4923,4431,4313,7154,3603,3132,9913,8433,9524,511

Applied Materials Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Gross_Profit 9929599591,0161,0189599161,0041,1921,399
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