Switch to:
GuruFocus has detected 7 Warning Signs with General Electric Co \$GE.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
General Electric Co (NYSE:GE)
Gross Profit
\$37,204 Mil (TTM As of Sep. 2016)

General Electric Co's gross profit for the three months ended in Sep. 2016 was \$8,300 Mil. General Electric Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was \$37,204 Mil.

Gross Margin is calculated as gross profit divided by its revenue. General Electric Co's gross profit for the three months ended in Sep. 2016 was \$8,300 Mil. General Electric Co's revenue for the three months ended in Sep. 2016 was \$29,266 Mil. Therefore, General Electric Co's Gross Margin for the quarter that ended in Sep. 2016 was 28.36%.

General Electric Co had a gross margin of 28.36% for the quarter that ended in Sep. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of General Electric Co was 57.61%. The lowest was 28.57%. And the median was 51.58%.

Warning Sign:

General Electric Co gross margin has been in long term decline. The average rate of decline per year is -13.9%.

Definition

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

General Electric Co's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

 Gross Profit (A: Dec. 2015 ) = Revenue - Cost of Goods Sold = 117386 - 82693 = 34,693

General Electric Co's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

 Gross Profit (Q: Sep. 2016 ) = Revenue - Cost of Goods Sold = 29266 - 20966 = 8,300

General Electric Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 10309 (Dec. 2015 ) + 7484 (Mar. 2016 ) + 11111 (Jun. 2016 ) + 8300 (Sep. 2016 ) = \$37,204 Mil.

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

General Electric Co's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

 Gross Margin (Q: Sep. 2016 ) = Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 8,300 / 29266 = 28.36 %

* 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

General Electric Co had a gross margin of 28.36% for the quarter that ended in Sep. 2016 => Competition eroding margins

Related Terms

Historical Data

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

General Electric Co Annual Data

 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Gross_Profit 84,795 99,363 97,809 79,357 77,854 78,264 72,374 33,404 33,480 34,693

General Electric Co Quarterly Data

 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Gross_Profit 12,254 12,367 -2,847 7,557 8,654 8,173 10,309 7,484 11,111 8,300
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)