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American Electric Power Co Inc (NYSE:AEP)
Gross Profit
$10,567 Mil (TTM As of Sep. 2014)

American Electric Power Co Inc's gross profit for the three months ended in Sep. 2014 was $2,773 Mil. American Electric Power Co Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $10,567 Mil.

Gross Margin is calculated as gross profit divided by its revenue. American Electric Power Co Inc's gross profit for the three months ended in Sep. 2014 was $2,773 Mil. American Electric Power Co Inc's revenue for the three months ended in Sep. 2014 was $4,302 Mil. Therefore, American Electric Power Co Inc's Gross Margin for the quarter that ended in Sep. 2014 was 64.46%.

American Electric Power Co Inc had a gross margin of 64.46% for the quarter that ended in Sep. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of American Electric Power Co Inc was 71.33%. The lowest was 13.88%. And the median was 64.24%.


Definition

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

American Electric Power Co Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=15357 - 5559
=9,798

American Electric Power Co Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=4302 - 1529
=2,773

American Electric Power Co Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 2424 (Dec. 2013 ) + 2842 (Mar. 2014 ) + 2528 (Jun. 2014 ) + 2773 (Sep. 2014 ) = $10,567 Mil.

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

American Electric Power Co Inc'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
=2,773 / 4302
=64.46 %

* 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

American Electric Power Co Inc had a gross margin of 64.46% for the quarter that ended in Sep. 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.

American Electric Power Co Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 7,6127,5767,9498,4138,6858,9589,3989,5049,6659,798

American Electric Power Co Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 2,3792,6492,3252,4242,3152,6352,4242,8422,5282,773
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