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Sherwin-Williams Co (NYSE:SHW)
Gross Profit
$5,071 Mil (TTM As of Sep. 2014)

Sherwin-Williams Co's gross profit for the three months ended in Sep. 2014 was $1,471 Mil. Sherwin-Williams Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $5,071 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sherwin-Williams Co's gross profit for the three months ended in Sep. 2014 was $1,471 Mil. Sherwin-Williams Co's revenue for the three months ended in Sep. 2014 was $3,151 Mil. Therefore, Sherwin-Williams Co's Gross Margin for the quarter that ended in Sep. 2014 was 46.69%.

Sherwin-Williams Co had a gross margin of 46.69% for the quarter that ended in Sep. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Sherwin-Williams Co was 48.05%. The lowest was 42.72%. And the median was 44.87%.


Definition

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

Sherwin-Williams Co's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=10185.532 - 5568.966
=4,617

Sherwin-Williams Co's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=3150.57 - 1679.615
=1,471

Sherwin-Williams Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 1124.178 (Dec. 2013 ) + 1065.901 (Mar. 2014 ) + 1409.653 (Jun. 2014 ) + 1470.955 (Sep. 2014 ) = $5,071 Mil.

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

Sherwin-Williams Co's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,471 / 3150.57
=46.69 %

* 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

Sherwin-Williams Co had a gross margin of 46.69% for the quarter that ended in Sep. 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.

Sherwin-Williams Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 2,7013,0803,4153,5993,4993,2633,4813,7454,2064,617

Sherwin-Williams Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 1,1511,1509969631,2341,2961,1241,0661,4101,471
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