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Walgreen Co (NYSE:WAG)
Gross Profit
\$21,569 Mil (TTM As of Aug. 2014)

Walgreen Co's gross profit for the three months ended in Aug. 2014 was \$5,327 Mil. Walgreen Co's gross profit for the trailing twelve months (TTM) ended in Aug. 2014 was \$21,569 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Walgreen Co's gross profit for the three months ended in Aug. 2014 was \$5,327 Mil. Walgreen Co's revenue for the three months ended in Aug. 2014 was \$19,057 Mil. Therefore, Walgreen Co's Gross Margin for the quarter that ended in Aug. 2014 was 27.95%.

Walgreen Co had a gross margin of 27.95% for the quarter that ended in Aug. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Walgreen Co was 29.29%. The lowest was 26.52%. And the median was 28.21%.

Definition

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

Walgreen Co's Gross Profit for the fiscal year that ended in Aug. 2014 is calculated as

 Gross Profit (A: Aug. 2014 ) = Revenue - Cost of Goods Sold = 76392 - 54823 = 21,569

Walgreen Co's Gross Profit for the quarter that ended in Aug. 2014 is calculated as

 Gross Profit (Q: Aug. 2014 ) = Revenue - Cost of Goods Sold = 19057 - 13730 = 5,327

Walgreen Co Gross Profit for the trailing twelve months (TTM) ended in Aug. 2014 was 5152 (Nov. 2013 ) + 5650 (Feb. 2014 ) + 5440 (May. 2014 ) + 5327 (Aug. 2014 ) = \$21,569 Mil.

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

Walgreen Co's Gross Margin for the quarter that ended in Aug. 2014 is calculated as

 Gross Margin (Q: Aug. 2014 ) = Gross Profit (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 ) = (Revenue - Cost of Goods Sold) / Revenue = 5,327 / 19057 = 27.95 %

* 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

Walgreen Co had a gross margin of 27.95% for the quarter that ended in Aug. 2014 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Walgreen Co Annual Data

 Aug05 Aug06 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 Gross_Profit 11,788 13,169 15,244 16,643 17,613 18,976 20,492 20,342 21,119 21,569

Walgreen Co Quarterly Data

 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Gross_Profit 5,014 4,835 5,099 5,607 5,222 5,191 5,152 5,650 5,440 5,327
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