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GuruFocus has detected 6 Warning Signs with BHP Billiton Ltd \$BHP.
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BHP Billiton Ltd (NYSE:BHP)
Gross Profit
\$22,261 Mil (TTM As of Jun. 2016)

BHP Billiton Ltd's gross profit for the six months ended in Jun. 2016 was \$15,200 Mil. BHP Billiton Ltd's gross profit for the trailing twelve months (TTM) ended in Jun. 2016 was \$22,261 Mil.

Gross Margin is calculated as gross profit divided by its revenue. BHP Billiton Ltd's gross profit for the six months ended in Jun. 2016 was \$15,200 Mil. BHP Billiton Ltd's revenue for the six months ended in Jun. 2016 was \$15,200 Mil. Therefore, BHP Billiton Ltd's Gross Margin for the quarter that ended in Jun. 2016 was 100.00%.

BHP Billiton Ltd had a gross margin of 100.00% for the quarter that ended in Jun. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of BHP Billiton Ltd was 100.00%. The lowest was 56.73%. And the median was 68.26%.

Definition

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

BHP Billiton Ltd's Gross Profit for the fiscal year that ended in Jun. 2016 is calculated as

 Gross Profit (A: Jun. 2016 ) = Revenue - Cost of Goods Sold = 30912 - 8651 = 22,261

BHP Billiton Ltd's Gross Profit for the quarter that ended in Jun. 2016 is calculated as

 Gross Profit (Q: Jun. 2016 ) = Revenue - Cost of Goods Sold = 15200 - 0 = 15,200

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. BHP Billiton Ltd Gross Profit for the trailing twelve months (TTM) ended in Jun. 2016 was \$22,261 Mil.

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

BHP Billiton Ltd's Gross Margin for the quarter that ended in Jun. 2016 is calculated as

 Gross Margin (Q: Jun. 2016 ) = Gross Profit (Q: Jun. 2016 ) / Revenue (Q: Jun. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 15,200 / 15200 = 100.00 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

BHP Billiton Ltd had a gross margin of 100.00% for the quarter that ended in Jun. 2016 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

BHP Billiton Ltd Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Gross_Profit 35,068 35,927 28,485 32,912 48,522 44,337 37,101 43,989 34,452 22,261

BHP Billiton Ltd Semi-Annual Data

 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Gross_Profit 37,480 6,857 32,066 5,035 33,948 10,041 24,860 19,776 15,712 15,200
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