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Western Digital Corp (NAS:WDC)
Gross Profit
$4,421 Mil (TTM As of Sep. 2014)

Western Digital Corp's gross profit for the three months ended in Sep. 2014 was $1,149 Mil. Western Digital Corp's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $4,421 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Western Digital Corp's gross profit for the three months ended in Sep. 2014 was $1,149 Mil. Western Digital Corp's revenue for the three months ended in Sep. 2014 was $3,943 Mil. Therefore, Western Digital Corp's Gross Margin for the quarter that ended in Sep. 2014 was 29.14%.

Western Digital Corp had a gross margin of 29.14% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Western Digital Corp was 29.16%. The lowest was 0.49%. And the median was 16.78%.


Definition

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

Western Digital 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
=15130 - 10770
=4,360

Western Digital Corp's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=3943 - 2794
=1,149

Western Digital Corp Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 1141 (Dec. 2013 ) + 1060 (Mar. 2014 ) + 1071 (Jun. 2014 ) + 1149 (Sep. 2014 ) = $4,421 Mil.

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

Western Digital Corp'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
=1,149 / 3943
=29.14 %

* 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

Western Digital Corp had a gross margin of 29.14% for the quarter that ended in Sep. 2014 => Competition eroding margins


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.

Western Digital Corp Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Gross_Profit 5908299001,7391,3372,4011,7913,6384,3634,360

Western Digital Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 1,4721,1931,0591,0611,0501,0991,1411,0601,0711,149
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