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Avago Technologies Ltd (NAS:AVGO)
Gross Profit
$1,435 Mil (TTM As of Jul. 2014)

Avago Technologies Ltd's gross profit for the three months ended in Jul. 2014 was $393 Mil. Avago Technologies Ltd's gross profit for the trailing twelve months (TTM) ended in Jul. 2014 was $1,435 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Avago Technologies Ltd's gross profit for the three months ended in Jul. 2014 was $393 Mil. Avago Technologies Ltd's revenue for the three months ended in Jul. 2014 was $1,269 Mil. Therefore, Avago Technologies Ltd's Gross Margin for the quarter that ended in Jul. 2014 was 30.97%.

Avago Technologies Ltd had a gross margin of 30.97% for the quarter that ended in Jul. 2014 => Competition eroding margins

During the past 7 years, the highest Gross Margin of Avago Technologies Ltd was 49.10%. The lowest was 23.71%. And the median was 46.15%.


Definition

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

Avago Technologies Ltd's Gross Profit for the fiscal year that ended in Oct. 2013 is calculated as

Gross Profit (A: Oct. 2013 )=Revenue - Cost of Goods Sold
=2520 - 1322
=1,198

Avago Technologies Ltd's Gross Profit for the quarter that ended in Jul. 2014 is calculated as

Gross Profit (Q: Jul. 2014 )=Revenue - Cost of Goods Sold
=1269 - 876
=393

Avago Technologies Ltd Gross Profit for the trailing twelve months (TTM) ended in Jul. 2014 was 346 (Oct. 2013 ) + 339 (Jan. 2014 ) + 357 (Apr. 2014 ) + 393 (Jul. 2014 ) = $1,435 Mil.

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

Avago Technologies Ltd's Gross Margin for the quarter that ended in Jul. 2014 is calculated as

Gross Margin (Q: Jul. 2014 )=Gross Profit (Q: Jul. 2014 ) / Revenue (Q: Jul. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=393 / 1269
=30.97 %

* 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

Avago Technologies Ltd had a gross margin of 30.97% for the quarter that ended in Jul. 2014 => Competition eroding margins


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.

Avago Technologies Ltd Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross_Profit 0003626555609661,1471,1421,198

Avago Technologies Ltd Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross_Profit 278295299276272304346339357393
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