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Johnson & Johnson (NYSE:JNJ)
Gross Profit
$49,771 Mil (TTM As of Sep. 2016)

Johnson & Johnson's gross profit for the three months ended in Sep. 2016 was $12,334 Mil. Johnson & Johnson's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was $49,771 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Johnson & Johnson's gross profit for the three months ended in Sep. 2016 was $12,334 Mil. Johnson & Johnson's revenue for the three months ended in Sep. 2016 was $17,820 Mil. Therefore, Johnson & Johnson's Gross Margin for the quarter that ended in Sep. 2016 was 69.21%.

Johnson & Johnson had a gross margin of 69.21% for the quarter that ended in Sep. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Johnson & Johnson was 71.76%. The lowest was 67.78%. And the median was 69.45%.


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. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=70074 - 21536
=48,538

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

Gross Profit (Q: Sep. 2016 )=Revenue - Cost of Goods Sold
=17820 - 5486
=12,334

Johnson & Johnson Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 12138 (Dec. 2015 ) + 12153 (Mar. 2016 ) + 13146 (Jun. 2016 ) + 12334 (Sep. 2016 ) = $49,771 Mil.

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

Johnson & Johnson'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
=12,334 / 17820
=69.21 %

* 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

Johnson & Johnson had a gross margin of 69.21% 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.

Johnson & Johnson Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 38,26743,34445,23643,45042,79544,67045,56648,97051,58548,538

Johnson & Johnson Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross_Profit 13,45613,06812,40112,09212,43011,87812,13812,15313,14612,334
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