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Alphabet Inc (NAS:GOOG)
Gross Profit
$52,872 Mil (TTM As of Sep. 2016)

Alphabet Inc's gross profit for the three months ended in Sep. 2016 was $13,752 Mil. Alphabet Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was $52,872 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Alphabet Inc's gross profit for the three months ended in Sep. 2016 was $13,752 Mil. Alphabet Inc's revenue for the three months ended in Sep. 2016 was $22,451 Mil. Therefore, Alphabet Inc's Gross Margin for the quarter that ended in Sep. 2016 was 61.25%.

Alphabet Inc had a gross margin of 61.25% for the quarter that ended in Sep. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Alphabet Inc was 65.21%. The lowest was 56.78%. And the median was 60.76%.

Warning Sign:

Alphabet Inc gross margin has been in long term decline. The average rate of decline per year is -1.1%.


Definition

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

Alphabet Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=66001 - 25691
=40,310

Alphabet Inc's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

Gross Profit (Q: Sep. 2016 )=Revenue - Cost of Goods Sold
=22451 - 8699
=13,752

Alphabet Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 13141 (Dec. 2015 ) + 12609 (Mar. 2016 ) + 13370 (Jun. 2016 ) + 13752 (Sep. 2016 ) = $52,872 Mil.

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

Alphabet Inc'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
=13,752 / 22451
=61.25 %

* 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

Alphabet Inc had a gross margin of 61.25% for the quarter that ended in Sep. 2016 => 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 local exchange's currency.

Alphabet Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 6,3809,94513,17414,80618,90424,71729,54133,96740,31046,825

Alphabet Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross_Profit 9,8419,82811,18210,90211,14411,63813,14112,60913,37013,752
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