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Johnson & Johnson (NYSE:JNJ)
Gross Profit
$51,585 Mil (TTM As of Dec. 2014)

Johnson & Johnson's gross profit for the three months ended in Dec. 2014 was $12,401 Mil. Johnson & Johnson's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $51,585 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Johnson & Johnson's gross profit for the three months ended in Dec. 2014 was $12,401 Mil. Johnson & Johnson's revenue for the three months ended in Dec. 2014 was $18,254 Mil. Therefore, Johnson & Johnson's Gross Margin for the quarter that ended in Dec. 2014 was 67.94%.

Johnson & Johnson had a gross margin of 67.94% for the quarter that ended in Dec. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Johnson & Johnson was 73.67%. The lowest was 67.78%. And the median was 70.93%.


Definition

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

Johnson & Johnson'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
=74331 - 22746
=51,585

Johnson & Johnson's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=18254 - 5853
=12,401

Johnson & Johnson Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 12660 (Mar. 2014 ) + 13456 (Jun. 2014 ) + 13068 (Sep. 2014 ) + 12401 (Dec. 2014 ) = $51,585 Mil.

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

Johnson & Johnson's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=12,401 / 18254
=67.94 %

* 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

Johnson & Johnson had a gross margin of 67.94% for the quarter that ended in Dec. 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.

Johnson & Johnson Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 36,50438,26743,34445,23643,45042,79544,67045,56648,97051,585

Johnson & Johnson Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Gross_Profit 11,55511,95112,38812,23112,40012,66013,45613,06812,40112,092
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