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Medtronic PLC (NYSE:MDT)
Gross Profit
$18,857 Mil (TTM As of Jan. 2016)

Medtronic PLC's gross profit for the three months ended in Jan. 2016 was $4,793 Mil. Medtronic PLC's gross profit for the trailing twelve months (TTM) ended in Jan. 2016 was $18,857 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Medtronic PLC's gross profit for the three months ended in Jan. 2016 was $4,793 Mil. Medtronic PLC's revenue for the three months ended in Jan. 2016 was $6,934 Mil. Therefore, Medtronic PLC's Gross Margin for the quarter that ended in Jan. 2016 was 69.12%.

Medtronic PLC had a gross margin of 69.12% for the quarter that ended in Jan. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Medtronic PLC was 75.97%. The lowest was 68.86%. And the median was 75.10%.

Warning Sign:

Medtronic PLC gross margin has been in long term decline. The average rate of decline per year is -1.5%.


Definition

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

Medtronic PLC's Gross Profit for the fiscal year that ended in Apr. 2015 is calculated as

Gross Profit (A: Apr. 2015 )=Revenue - Cost of Goods Sold
=20261 - 6309
=13,952

Medtronic PLC's Gross Profit for the quarter that ended in Jan. 2016 is calculated as

Gross Profit (Q: Jan. 2016 )=Revenue - Cost of Goods Sold
=6934 - 2141
=4,793

Medtronic PLC Gross Profit for the trailing twelve months (TTM) ended in Jan. 2016 was 4370 (Apr. 2015 ) + 4818 (Jul. 2015 ) + 4876 (Oct. 2015 ) + 4793 (Jan. 2016 ) = $18,857 Mil.

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

Medtronic PLC's Gross Margin for the quarter that ended in Jan. 2016 is calculated as

Gross Margin (Q: Jan. 2016 )=Gross Profit (Q: Jan. 2016 ) / Revenue (Q: Jan. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,793 / 6934
=69.12 %

* 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

Medtronic PLC had a gross margin of 69.12% for the quarter that ended in Jan. 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 own currency.

Medtronic PLC Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
Gross_Profit 9,13110,06911,08112,00512,02112,29512,46412,67213,95219,691

Medtronic PLC Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
Gross_Profit 3,1133,3943,1683,2243,1904,3704,8184,8764,7935,204
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