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Anglogold Ashanti Ltd (NYSE:AU)
Gross Profit
$1,228 Mil (TTM As of Jun. 2014)

Anglogold Ashanti Ltd's gross profit for the three months ended in Jun. 2014 was $252 Mil. Anglogold Ashanti Ltd's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $1,228 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Anglogold Ashanti Ltd's gross profit for the three months ended in Jun. 2014 was $252 Mil. Anglogold Ashanti Ltd's revenue for the three months ended in Jun. 2014 was $1,316 Mil. Therefore, Anglogold Ashanti Ltd's Gross Margin for the quarter that ended in Jun. 2014 was 19.15%.

Anglogold Ashanti Ltd had a gross margin of 19.15% for the quarter that ended in Jun. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Anglogold Ashanti Ltd was 47.86%. The lowest was 14.84%. And the median was 37.26%.

Warning Sign:

Anglogold Ashanti Ltd gross margin has been in long term decline. The average rate of decline per year is -6.1%.


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. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=5591 - 4146
=1,445

Anglogold Ashanti Ltd's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=1316 - 1064
=252

Anglogold Ashanti Ltd Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 598 (Sep. 2013 ) + 82 (Dec. 2013 ) + 296 (Mar. 2014 ) + 252 (Jun. 2014 ) = $1,228 Mil.

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

Anglogold Ashanti Ltd's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=252 / 1316
=19.15 %

* 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

Anglogold Ashanti Ltd had a gross margin of 19.15% for the quarter that ended in Jun. 2014 => No sustainable 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.

Anglogold Ashanti Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 7667621,1181,0611,3671,5752,5402,6772,3541,445

Anglogold Ashanti Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 86079558811143433059882296252
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