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Computer Sciences Corporation (NYSE:CSC)
Gross Profit
$3,358 Mil (TTM As of Dec. 2013)

Computer Sciences Corporation's gross profit for the three months ended in Dec. 2013 was $866 Mil. Computer Sciences Corporation's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $3,358 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Computer Sciences Corporation's gross profit for the three months ended in Dec. 2013 was $866 Mil. Computer Sciences Corporation's revenue for the three months ended in Dec. 2013 was $3,228 Mil. Therefore, Computer Sciences Corporation's Gross Margin for the quarter that ended in Dec. 2013 was 26.83%.

Computer Sciences Corporation had a gross margin of 26.83% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Computer Sciences Corporation was 22.01%. The lowest was 6.07%. And the median was 20.45%.

Warning Sign:

Computer Sciences Corporation gross margin has been in long term decline. The average rate of decline per year is -9.8%.


Definition

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

Computer Sciences Corporation's Gross Profit for the fiscal year that ended in Mar. 2013 is calculated as

Gross Profit (A: Mar. 2013 )=Revenue - Cost of Goods Sold
=14993 - 11851
=3,142

Computer Sciences Corporation's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=3228 - 2362
=866

Computer Sciences Corporation Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 849 (Mar. 2013 ) + 794 (Jun. 2013 ) + 849 (Sep. 2013 ) + 866 (Dec. 2013 ) = $3,358 Mil.

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

Computer Sciences Corporation'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
=866 / 3228
=26.83 %

* 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

Computer Sciences Corporation had a gross margin of 26.83% for the quarter that ended in Dec. 2013 => 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.

Computer Sciences Corporation Annual Data

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
Gross_Profit 2,7612,7442,8963,0393,3483,4793,3313,1179633,142

Computer Sciences Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 456-754593704860786849794849866
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