Switch to:
Microsoft Corp (NAS:MSFT)
Gross Profit
$59,899 Mil (TTM As of Jun. 2014)

Microsoft Corp's gross profit for the three months ended in Jun. 2014 was $15,787 Mil. Microsoft Corp's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $59,899 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Microsoft Corp's gross profit for the three months ended in Jun. 2014 was $15,787 Mil. Microsoft Corp's revenue for the three months ended in Jun. 2014 was $23,382 Mil. Therefore, Microsoft Corp's Gross Margin for the quarter that ended in Jun. 2014 was 67.52%.

Microsoft Corp had a gross margin of 67.52% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Microsoft Corp was 98.81%. The lowest was 68.98%. And the median was 82.05%.

Warning Sign:

Microsoft Corp gross margin has been in long term decline. The average rate of decline per year is -2.7%.


Definition

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

Microsoft Corp's Gross Profit for the fiscal year that ended in Jun. 2014 is calculated as

Gross Profit (A: Jun. 2014 )=Revenue - Cost of Goods Sold
=86833 - 26934
=59,899

Microsoft Corp's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=23382 - 7595
=15,787

Microsoft Corp Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 13415 (Sep. 2013 ) + 16235 (Dec. 2013 ) + 14462 (Mar. 2014 ) + 15787 (Jun. 2014 ) = $59,899 Mil.

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

Microsoft Corp's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=15,787 / 23382
=67.52 %

* 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

Microsoft Corp had a gross margin of 67.52% for the quarter that ended in Jun. 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.

Microsoft Corp Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Gross_Profit 33,75736,63240,42948,82246,28250,08954,36656,19357,60059,899

Microsoft Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 13,45513,89611,84015,76415,70214,29413,41516,23514,46215,787
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)
Free 7-day Trial
FEEDBACK