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AbbVie Inc (NYSE:ABBV)
Gross Profit
$15,534 Mil (TTM As of Dec. 2014)

AbbVie Inc's gross profit for the three months ended in Dec. 2014 was $4,333 Mil. AbbVie Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $15,534 Mil.

Gross Margin is calculated as gross profit divided by its revenue. AbbVie Inc's gross profit for the three months ended in Dec. 2014 was $4,333 Mil. AbbVie Inc's revenue for the three months ended in Dec. 2014 was $5,452 Mil. Therefore, AbbVie Inc's Gross Margin for the quarter that ended in Dec. 2014 was 79.48%.

AbbVie Inc had a gross margin of 79.48% for the quarter that ended in Dec. 2014 => Durable competitive advantage

During the past 5 years, the highest Gross Margin of AbbVie Inc was 77.83%. The lowest was 72.55%. And the median was 75.47%.


Definition

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

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

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=19960 - 4426
=15,534

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

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=5452 - 1119
=4,333

AbbVie Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 3463 (Mar. 2014 ) + 3813 (Jun. 2014 ) + 3925 (Sep. 2014 ) + 4333 (Dec. 2014 ) = $15,534 Mil.

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

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

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,333 / 5452
=79.48 %

* 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

AbbVie Inc had a gross margin of 79.48% for the quarter that ended in Dec. 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.

AbbVie Inc Annual Data

Dec10Dec11Dec12Dec13Dec14
Gross_Profit 0000011,34512,80513,87214,20915,534

AbbVie Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Gross_Profit 3,4943,9413,1763,6383,5663,8293,4633,8133,9254,333
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