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Nike Inc (NYSE:NKE)
Gross Profit
$12,446 Mil (TTM As of May. 2014)

Nike Inc's gross profit for the three months ended in May. 2014 was $3,385 Mil. Nike Inc's gross profit for the trailing twelve months (TTM) ended in May. 2014 was $12,446 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Nike Inc's gross profit for the three months ended in May. 2014 was $3,385 Mil. Nike Inc's revenue for the three months ended in May. 2014 was $7,425 Mil. Therefore, Nike Inc's Gross Margin for the quarter that ended in May. 2014 was 45.59%.

Nike Inc had a gross margin of 45.59% for the quarter that ended in May. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Nike Inc was 46.28%. The lowest was 38.95%. And the median was 43.18%.


Definition

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

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

Gross Profit (A: May. 2014 )=Revenue - Cost of Goods Sold
=27799 - 15353
=12,446

Nike Inc's Gross Profit for the quarter that ended in May. 2014 is calculated as

Gross Profit (Q: May. 2014 )=Revenue - Cost of Goods Sold
=7425 - 4040
=3,385

Nike Inc Gross Profit for the trailing twelve months (TTM) ended in May. 2014 was 3132 (Aug. 2013 ) + 2826 (Nov. 2013 ) + 3103 (Feb. 2014 ) + 3385 (May. 2014 ) = $12,446 Mil.

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

Nike Inc's Gross Margin for the quarter that ended in May. 2014 is calculated as

Gross Margin (Q: May. 2014 )=Gross Profit (Q: May. 2014 ) / Revenue (Q: May. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=3,385 / 7425
=45.59 %

* 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

Nike Inc had a gross margin of 45.59% for the quarter that ended in May. 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.

Nike Inc Annual Data

May05May06May07May08May09May10May11May12May13May14
Gross_Profit 6,1156,5877,1618,3878,6048,8009,20210,14811,03412,446

Nike Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Gross_Profit 2,4852,6692,8282,5302,7362,9403,1322,8263,1033,385
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