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Analog Devices Inc (NAS:ADI)
Gross Profit
$2,202 Mil (TTM As of Jul. 2016)

Analog Devices Inc's gross profit for the three months ended in Jul. 2016 was $572 Mil. Analog Devices Inc's gross profit for the trailing twelve months (TTM) ended in Jul. 2016 was $2,202 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Analog Devices Inc's gross profit for the three months ended in Jul. 2016 was $572 Mil. Analog Devices Inc's revenue for the three months ended in Jul. 2016 was $870 Mil. Therefore, Analog Devices Inc's Gross Margin for the quarter that ended in Jul. 2016 was 65.81%.

Analog Devices Inc had a gross margin of 65.81% for the quarter that ended in Jul. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Analog Devices Inc was 66.37%. The lowest was 55.52%. And the median was 64.08%.


Definition

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

Analog Devices Inc's Gross Profit for the fiscal year that ended in Oct. 2015 is calculated as

Gross Profit (A: Oct. 2015 )=Revenue - Cost of Goods Sold
=3435.092 - 1175.83
=2,259

Analog Devices Inc's Gross Profit for the quarter that ended in Jul. 2016 is calculated as

Gross Profit (Q: Jul. 2016 )=Revenue - Cost of Goods Sold
=869.591 - 297.301
=572

Analog Devices Inc Gross Profit for the trailing twelve months (TTM) ended in Jul. 2016 was 641.796 (Oct. 2015 ) + 477.293 (Jan. 2016 ) + 510.903 (Apr. 2016 ) + 572.29 (Jul. 2016 ) = $2,202 Mil.

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

Analog Devices Inc's Gross Margin for the quarter that ended in Jul. 2016 is calculated as

Gross Margin (Q: Jul. 2016 )=Gross Profit (Q: Jul. 2016 ) / Revenue (Q: Jul. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=572 / 869.591
=65.81 %

* 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

Analog Devices Inc had a gross margin of 65.81% for the quarter that ended in Jul. 2016 => 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.

Analog Devices Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Gross_Profit 1,3941,5081,5771,1191,7991,9871,7411,6921,8302,259

Analog Devices Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
Gross_Profit 459476486504545569642477511572
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