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Beam Inc (NYSE:BEAM)
Gross Profit
\$1,481 Mil (TTM As of Dec. 2013)

Beam Inc's gross profit for the three months ended in Dec. 2013 was \$415 Mil. Beam Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was \$1,481 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Beam Inc's gross profit for the three months ended in Dec. 2013 was \$415 Mil. Beam Inc's revenue for the three months ended in Dec. 2013 was \$740 Mil. Therefore, Beam Inc's Gross Margin for the quarter that ended in Dec. 2013 was 56.06%.

Beam Inc had a gross margin of 56.06% for the quarter that ended in Dec. 2013 => Durable competitive advantage

Definition

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

Beam 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 = 2547.3 - 1067.9 = 1,479

Beam Inc's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

 Gross Profit (Q: Dec. 2013 ) = Revenue - Cost of Goods Sold = 739.5 - 324.9 = 415

Beam Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 349.1 (Mar. 2013 ) + 374.1 (Jun. 2013 ) + 343.4 (Sep. 2013 ) + 414.6 (Dec. 2013 ) = \$1,481 Mil.

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

Beam Inc's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

 Gross Margin (Q: Dec. 2013 ) = Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 ) = (Revenue - Cost of Goods Sold) / Revenue = 415 / 739.5 = 56.06 %

* 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

Beam Inc had a gross margin of 56.06% for the quarter that ended in Dec. 2013 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Beam Inc Annual Data

 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Gross_Profit 2,969 2,892 3,636 3,488 3,060 3,144 1,230 1,323 1,436 1,479

Beam Inc Quarterly Data

 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Gross_Profit 735 -806 315 348 371 405 349 374 343 415
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