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Brown-Forman Corporation (NYSE:BF.B)
Gross Profit
$2,045 Mil (TTM As of Jan. 2014)

Brown-Forman Corporation's gross profit for the three months ended in Jan. 2014 was $532 Mil. Brown-Forman Corporation's gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $2,045 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Brown-Forman Corporation's gross profit for the three months ended in Jan. 2014 was $532 Mil. Brown-Forman Corporation's revenue for the three months ended in Jan. 2014 was $782 Mil. Therefore, Brown-Forman Corporation's Gross Margin for the quarter that ended in Jan. 2014 was 68.03%.

Brown-Forman Corporation had a gross margin of 68.03% for the quarter that ended in Jan. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Brown-Forman Corporation was 68.62%. The lowest was 57.34%. And the median was 62.50%.


Definition

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

Brown-Forman Corporation's Gross Profit for the fiscal year that ended in Apr. 2013 is calculated as

Gross Profit (A: Apr. 2013 )=Revenue - Cost of Goods Sold
=2849 - 894
=1,955

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

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=782 - 250
=532

Brown-Forman Corporation Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 460 (Apr. 2013 ) + 477 (Jul. 2013 ) + 576 (Oct. 2013 ) + 532 (Jan. 2014 ) = $2,045 Mil.

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

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

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=532 / 782
=68.03 %

* 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 Corporation had a gross margin of 68.03% for the quarter that ended in Jan. 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 Corporation Annual Data

Apr04Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13
Gross_Profit 1,0351,1561,3081,4811,6951,5771,6111,7241,7951,955

Brown-Forman Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 502451422464525507460477576532
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