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Esterline Technologies (NYSE:ESL)
Gross Profit
$743 Mil (TTM As of Jul. 2014)

Esterline Technologies's gross profit for the three months ended in Jul. 2014 was $182 Mil. Esterline Technologies's gross profit for the trailing twelve months (TTM) ended in Jul. 2014 was $743 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Esterline Technologies's gross profit for the three months ended in Jul. 2014 was $182 Mil. Esterline Technologies's revenue for the three months ended in Jul. 2014 was $531 Mil. Therefore, Esterline Technologies's Gross Margin for the quarter that ended in Jul. 2014 was 34.36%.

Esterline Technologies had a gross margin of 34.36% for the quarter that ended in Jul. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Esterline Technologies was 44.90%. The lowest was 30.91%. And the median was 35.21%.


Definition

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

Esterline Technologies's Gross Profit for the fiscal year that ended in Oct. 2013 is calculated as

Gross Profit (A: Oct. 2013 )=Revenue - Cost of Goods Sold
=1969.754 - 1243.758
=726

Esterline Technologies's Gross Profit for the quarter that ended in Jul. 2014 is calculated as

Gross Profit (Q: Jul. 2014 )=Revenue - Cost of Goods Sold
=531.124 - 348.651
=182

Esterline Technologies Gross Profit for the trailing twelve months (TTM) ended in Jul. 2014 was 205.373 (Oct. 2013 ) + 173.295 (Jan. 2014 ) + 182.345 (Apr. 2014 ) + 182.473 (Jul. 2014 ) = $743 Mil.

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

Esterline Technologies's Gross Margin for the quarter that ended in Jul. 2014 is calculated as

Gross Margin (Q: Jul. 2014 )=Gross Profit (Q: Jul. 2014 ) / Revenue (Q: Jul. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=182 / 531.124
=34.36 %

* 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

Esterline Technologies had a gross margin of 34.36% for the quarter that ended in Jul. 2014 => Competition eroding margins


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.

Esterline Technologies Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross_Profit 195262287373490462516590719726

Esterline Technologies Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross_Profit 185172204160181179205173182182
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