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GuruFocus has detected 6 Warning Signs with Tyco International PLC \$TYC.
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Tyco International PLC (NYSE:TYC)
Gross Profit
\$3,576 Mil (TTM As of Jun. 2016)

Tyco International PLC's gross profit for the three months ended in Jun. 2016 was \$915 Mil. Tyco International PLC's gross profit for the trailing twelve months (TTM) ended in Jun. 2016 was \$3,576 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Tyco International PLC's gross profit for the three months ended in Jun. 2016 was \$915 Mil. Tyco International PLC's revenue for the three months ended in Jun. 2016 was \$2,449 Mil. Therefore, Tyco International PLC's Gross Margin for the quarter that ended in Jun. 2016 was 37.36%.

Tyco International PLC had a gross margin of 37.36% for the quarter that ended in Jun. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Tyco International PLC was 37.01%. The lowest was 32.81%. And the median was 35.32%.

Definition

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

Tyco International PLC's Gross Profit for the fiscal year that ended in Sep. 2015 is calculated as

 Gross Profit (A: Sep. 2015 ) = Revenue - Cost of Goods Sold = 9902 - 6270 = 3,632

Tyco International PLC's Gross Profit for the quarter that ended in Jun. 2016 is calculated as

 Gross Profit (Q: Jun. 2016 ) = Revenue - Cost of Goods Sold = 2449 - 1534 = 915

Tyco International PLC Gross Profit for the trailing twelve months (TTM) ended in Jun. 2016 was 926 (Sep. 2015 ) + 878 (Dec. 2015 ) + 857 (Mar. 2016 ) + 915 (Jun. 2016 ) = \$3,576 Mil.

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

Tyco International PLC's Gross Margin for the quarter that ended in Jun. 2016 is calculated as

 Gross Margin (Q: Jun. 2016 ) = Gross Profit (Q: Jun. 2016 ) / Revenue (Q: Jun. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 915 / 2449 = 37.36 %

* 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

Tyco International PLC had a gross margin of 37.36% for the quarter that ended in Jun. 2016 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Tyco International PLC Annual Data

 Sep06 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Gross_Profit 5,909 6,340 7,076 6,012 3,616 3,667 3,576 3,669 3,785 3,632

Tyco International PLC Quarterly Data

 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Gross_Profit 902 985 982 909 881 916 926 878 857 915
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