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Cisco Systems Inc (NAS:CSCO)
Gross Profit
$28,216 Mil (TTM As of Jan. 2014)

Cisco Systems Inc's gross profit for the three months ended in Jan. 2014 was $5,951 Mil. Cisco Systems Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $28,216 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Cisco Systems Inc's gross profit for the three months ended in Jan. 2014 was $5,951 Mil. Cisco Systems Inc's revenue for the three months ended in Jan. 2014 was $11,155 Mil. Therefore, Cisco Systems Inc's Gross Margin for the quarter that ended in Jan. 2014 was 53.35%.

Cisco Systems Inc had a gross margin of 53.35% for the quarter that ended in Jan. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Cisco Systems Inc was 70.10%. The lowest was 49.67%. And the median was 64.36%.

Warning Sign:

Cisco Systems Inc gross margin has been in long term decline. The average rate of decline per year is -1.3%.


Definition

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

Cisco Systems Inc's Gross Profit for the fiscal year that ended in Jul. 2013 is calculated as

Gross Profit (A: Jul. 2013 )=Revenue - Cost of Goods Sold
=48607 - 19167
=29,440

Cisco Systems Inc's Gross Profit for the quarter that ended in Jan. 2014 is calculated as

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=11155 - 5204
=5,951

Cisco Systems Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 7511 (Apr. 2013 ) + 7347 (Jul. 2013 ) + 7407 (Oct. 2013 ) + 5951 (Jan. 2014 ) = $28,216 Mil.

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

Cisco Systems Inc's Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=5,951 / 11155
=53.35 %

* 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

Cisco Systems Inc had a gross margin of 53.35% for the quarter that ended in Jan. 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.

Cisco Systems Inc Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
Gross_Profit 15,12616,67118,74722,33625,34623,09425,64326,53628,20929,440

Cisco Systems Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 6,8907,0657,1697,0857,2397,3437,5117,3477,4075,951
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