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Brown-Forman Corp (NYSE:BF.B)
Gross Profit
$2,129 Mil (TTM As of Oct. 2014)

Brown-Forman Corp's gross profit for the three months ended in Oct. 2014 was $609 Mil. Brown-Forman Corp's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $2,129 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Brown-Forman Corp's gross profit for the three months ended in Oct. 2014 was $609 Mil. Brown-Forman Corp's revenue for the three months ended in Oct. 2014 was $877 Mil. Therefore, Brown-Forman Corp's Gross Margin for the quarter that ended in Oct. 2014 was 69.44%.

Brown-Forman Corp had a gross margin of 69.44% for the quarter that ended in Oct. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Brown-Forman Corp was 69.48%. The lowest was 49.67%. And the median was 62.29%.


Definition

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

Brown-Forman Corp's Gross Profit for the fiscal year that ended in Apr. 2014 is calculated as

Gross Profit (A: Apr. 2014 )=Revenue - Cost of Goods Sold
=2991 - 913
=2,078

Brown-Forman Corp's Gross Profit for the quarter that ended in Oct. 2014 is calculated as

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=877 - 268
=609

Brown-Forman Corp Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 532 (Jan. 2014 ) + 493 (Apr. 2014 ) + 495 (Jul. 2014 ) + 609 (Oct. 2014 ) = $2,129 Mil.

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

Brown-Forman Corp's Gross Margin for the quarter that ended in Oct. 2014 is calculated as

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=609 / 877
=69.44 %

* 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

Brown-Forman Corp had a gross margin of 69.44% for the quarter that ended in Oct. 2014 => Durable 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.

Brown-Forman Corp Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Gross_Profit 1,1561,3081,4811,6951,5771,6111,7241,7951,9552,078

Brown-Forman Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 464525507460477576532493495609
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