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Best Buy Co Inc (NYSE:BBY)
Gross Profit
$9,126 Mil (TTM As of Jul. 2014)

Best Buy Co Inc's gross profit for the three months ended in Jul. 2014 was $2,055 Mil. Best Buy Co Inc's gross profit for the trailing twelve months (TTM) ended in Jul. 2014 was $9,126 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Best Buy Co Inc's gross profit for the three months ended in Jul. 2014 was $2,055 Mil. Best Buy Co Inc's revenue for the three months ended in Jul. 2014 was $8,896 Mil. Therefore, Best Buy Co Inc's Gross Margin for the quarter that ended in Jul. 2014 was 23.10%.

Best Buy Co Inc had a gross margin of 23.10% for the quarter that ended in Jul. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Best Buy Co Inc was 25.14%. The lowest was 13.74%. And the median was 23.61%.


Definition

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

Best Buy Co Inc's Gross Profit for the fiscal year that ended in Jan. 2014 is calculated as

Gross Profit (A: Jan. 2014 )=Revenue - Cost of Goods Sold
=42410 - 32720
=9,690

Best Buy Co Inc's Gross Profit for the quarter that ended in Jul. 2014 is calculated as

Gross Profit (Q: Jul. 2014 )=Revenue - Cost of Goods Sold
=8896 - 6841
=2,055

Best Buy Co Inc Gross Profit for the trailing twelve months (TTM) ended in Jul. 2014 was 2170 (Oct. 2013 ) + 2881 (Jan. 2014 ) + 2020 (Apr. 2014 ) + 2055 (Jul. 2014 ) = $9,126 Mil.

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

Best Buy Co Inc'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
=2,055 / 8896
=23.10 %

* 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

Best Buy Co Inc had a gross margin of 23.10% 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.

Best Buy Co Inc Annual Data

Feb04Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Jan14
Gross_Profit 5,8716,4957,7268,7699,54610,99812,16012,63712,5739,690

Best Buy Co Inc Quarterly Data

Feb12Apr12Jul12Oct12Apr13Jul13Oct13Jan14Apr14Jul14
Gross_Profit 4,0022,9072,5642,2282,1582,4582,1702,8812,0202,055
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