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Avon Products Inc (NYSE:AVP)
Gross Profit
$5,558 Mil (TTM As of Sep. 2014)

Avon Products Inc's gross profit for the three months ended in Sep. 2014 was $1,324 Mil. Avon Products Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $5,558 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Avon Products Inc's gross profit for the three months ended in Sep. 2014 was $1,324 Mil. Avon Products Inc's revenue for the three months ended in Sep. 2014 was $2,138 Mil. Therefore, Avon Products Inc's Gross Margin for the quarter that ended in Sep. 2014 was 61.94%.

Avon Products Inc had a gross margin of 61.94% for the quarter that ended in Sep. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Avon Products Inc was 63.26%. The lowest was 60.34%. And the median was 61.90%.


Definition

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

Avon Products Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=9955 - 3772.5
=6,183

Avon Products Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=2138.2 - 813.9
=1,324

Avon Products Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 1627.2 (Dec. 2013 ) + 1228.2 (Mar. 2014 ) + 1377.9 (Jun. 2014 ) + 1324.3 (Sep. 2014 ) = $5,558 Mil.

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

Avon Products Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,324 / 2138.2
=61.94 %

* 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

Avon Products Inc had a gross margin of 61.94% for the quarter that ended in Sep. 2014 => 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 own currency.

Avon Products Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 4,8155,0165,2435,9986,7416,4956,8227,1436,5486,183

Avon Products Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 1,6271,5601,7951,5421,5741,4511,6271,2281,3781,324
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