Switch to:
Cummins Inc (NYSE:CMI)
Gross Profit
$4,673 Mil (TTM As of Jun. 2016)

Cummins Inc's gross profit for the three months ended in Jun. 2016 was $1,197 Mil. Cummins Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2016 was $4,673 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Cummins Inc's gross profit for the three months ended in Jun. 2016 was $1,197 Mil. Cummins Inc's revenue for the three months ended in Jun. 2016 was $4,528 Mil. Therefore, Cummins Inc's Gross Margin for the quarter that ended in Jun. 2016 was 26.44%.

Cummins Inc had a gross margin of 26.44% for the quarter that ended in Jun. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Cummins Inc was 25.89%. The lowest was 19.59%. And the median was 24.35%.


Definition

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

Cummins Inc's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=19110 - 14163
=4,947

Cummins Inc's Gross Profit for the quarter that ended in Jun. 2016 is calculated as

Gross Profit (Q: Jun. 2016 )=Revenue - Cost of Goods Sold
=4528 - 3331
=1,197

Cummins Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2016 was 1208 (Sep. 2015 ) + 1212 (Dec. 2015 ) + 1056 (Mar. 2016 ) + 1197 (Jun. 2016 ) = $4,673 Mil.

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

Cummins Inc'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
=1,197 / 4528
=26.44 %

* 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

Cummins Inc had a gross margin of 26.44% for the quarter that ended in Jun. 2016 => 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.

Cummins Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 2,5952,5562,9402,1693,1684,5894,4164,2804,8614,947

Cummins Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
Gross_Profit 1,0991,2051,2841,2731,1951,3321,2081,2121,0561,197
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK