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Analog Devices Inc (NAS:ADI)
Gross Profit
$2,199 Mil (TTM As of Apr. 2016)

Analog Devices Inc's gross profit for the three months ended in Apr. 2016 was $511 Mil. Analog Devices Inc's gross profit for the trailing twelve months (TTM) ended in Apr. 2016 was $2,199 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Analog Devices Inc's gross profit for the three months ended in Apr. 2016 was $511 Mil. Analog Devices Inc's revenue for the three months ended in Apr. 2016 was $779 Mil. Therefore, Analog Devices Inc's Gross Margin for the quarter that ended in Apr. 2016 was 65.60%.

Analog Devices Inc had a gross margin of 65.60% for the quarter that ended in Apr. 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 62.48%.


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. 2014 is calculated as

Gross Profit (A: Oct. 2014 )=Revenue - Cost of Goods Sold
=2864.773 - 1034.585
=1,830

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

Gross Profit (Q: Apr. 2016 )=Revenue - Cost of Goods Sold
=778.766 - 267.863
=511

Analog Devices Inc Gross Profit for the trailing twelve months (TTM) ended in Apr. 2016 was 569.037 (Jul. 2015 ) + 641.796 (Oct. 2015 ) + 477.293 (Jan. 2016 ) + 510.903 (Apr. 2016 ) = $2,199 Mil.

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

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

Gross Margin (Q: Apr. 2016 )=Gross Profit (Q: Apr. 2016 ) / Revenue (Q: Apr. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=511 / 778.766
=65.60 %

* 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 65.60% for the quarter that ended in Apr. 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 1,5061,5191,5771,1191,7991,9871,7411,6921,8302,259

Analog Devices Inc Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
Gross_Profit 409459476486504545569642477511
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