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Aruba Networks Inc (NAS:ARUN)
Gross Profit
\$567.9 Mil (TTM As of Jan. 2015)

Aruba Networks Inc's gross profit for the three months ended in Jan. 2015 was \$152.6 Mil. Aruba Networks Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2015 was \$567.9 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Aruba Networks Inc's gross profit for the three months ended in Jan. 2015 was \$152.6 Mil. Aruba Networks Inc's revenue for the three months ended in Jan. 2015 was \$212.9 Mil. Therefore, Aruba Networks Inc's Gross Margin for the quarter that ended in Jan. 2015 was 71.65%.

Aruba Networks Inc had a gross margin of 71.65% for the quarter that ended in Jan. 2015 => Durable competitive advantage

Definition

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

Aruba Networks Inc's Gross Profit for the fiscal year that ended in Jul. 2014 is calculated as

 Gross Profit (A: Jul. 2014 ) = Revenue - Cost of Goods Sold = 728.933 - 224.781 = 504.2

Aruba Networks Inc's Gross Profit for the quarter that ended in Jan. 2015 is calculated as

 Gross Profit (Q: Jan. 2015 ) = Revenue - Cost of Goods Sold = 212.931 - 60.356 = 152.6

Aruba Networks Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2015 was 128.894 (Apr. 2014 ) + 139.879 (Jul. 2014 ) + 146.582 (Oct. 2014 ) + 152.575 (Jan. 2015 ) = \$567.9 Mil.

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

Aruba Networks Inc's Gross Margin for the quarter that ended in Jan. 2015 is calculated as

 Gross Margin (Q: Jan. 2015 ) = Gross Profit (Q: Jan. 2015 ) / Revenue (Q: Jan. 2015 ) = (Revenue - Cost of Goods Sold) / Revenue = 152.6 / 212.931 = 71.65 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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

Aruba Networks Inc had a gross margin of 71.65% for the quarter that ended in Jan. 2015 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Aruba Networks Inc Annual Data

 Jul05 Jul06 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Gross_Profit 3.0 42.6 84.1 121.1 131.4 180.5 273.8 365.3 423.6 504.2

Aruba Networks Inc Quarterly Data

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Gross_Profit 102.4 110.7 103.2 107.3 112.4 123.0 128.9 139.9 146.6 152.6
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