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GuruFocus has detected 2 Warning Signs with Anglogold Ashanti Ltd \$AU.
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Anglogold Ashanti Ltd (NYSE:AU)
Gross Profit
\$544 Mil (TTM As of Dec. 2016)

Anglogold Ashanti Ltd's gross profit for the three months ended in Dec. 2016 was \$0 Mil. Anglogold Ashanti Ltd's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$544 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Anglogold Ashanti Ltd's gross profit for the three months ended in Dec. 2016 was \$0 Mil. Anglogold Ashanti Ltd's revenue for the three months ended in Dec. 2016 was \$0 Mil. Therefore, Anglogold Ashanti Ltd's Gross Margin for the quarter that ended in Dec. 2016 was %.

Anglogold Ashanti Ltd had a gross margin of % for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Anglogold Ashanti Ltd was 47.02%. The lowest was 17.78%. And the median was 34.34%.

Warning Sign:

Anglogold Ashanti Ltd gross margin has been in long term decline. The average rate of decline per year is -15.4%.

Definition

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

Anglogold Ashanti Ltd's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

 Gross Profit (A: Dec. 2016 ) = Revenue - Cost of Goods Sold = 4085 - 3244 = 841

Anglogold Ashanti Ltd's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 0 - 0 = 0

Anglogold Ashanti Ltd Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 115 (Sep. 2015 ) + 208 (Dec. 2015 ) + 221 (Jun. 2016 ) + 0 (Dec. 2016 ) = \$544 Mil.

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

Anglogold Ashanti Ltd's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

 Gross Margin (Q: Dec. 2016 ) = Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 0 / 0 = %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Anglogold Ashanti Ltd had a gross margin of % for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Anglogold Ashanti Ltd Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 991 1,367 1,575 2,540 2,677 2,354 1,319 993 714 841

Anglogold Ashanti Ltd Quarterly Data

 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Jun16 Dec16 Gross_Profit 296 241 255 219 209 188 115 208 221 0
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