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Diageo PLC (NYSE:DEO)
Gross Profit
$10,566 Mil (TTM As of Dec. 2013)

Diageo PLC's gross profit for the six months ended in Dec. 2013 was $6,148 Mil. Diageo PLC's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $10,566 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Diageo PLC's gross profit for the six months ended in Dec. 2013 was $6,148 Mil. Diageo PLC's revenue for the six months ended in Dec. 2013 was $9,773 Mil. Therefore, Diageo PLC's Gross Margin for the quarter that ended in Dec. 2013 was 62.91%.

Diageo PLC had a gross margin of 62.91% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Diageo PLC was 62.43%. The lowest was 28.59%. And the median was 59.71%.


Definition

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

Diageo PLC's Gross Profit for the fiscal year that ended in Jun. 2013 is calculated as

Gross Profit (A: Jun. 2013 )=Revenue - Cost of Goods Sold
=17349.0136571 - 6783.00455235
=10,566

Diageo PLC's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=9772.6523888 - 3624.38220758
=6,148

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. Diageo PLC Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was $10,566 Mil.

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

Diageo PLC'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
=6,148 / 9772.6523888
=62.91 %

* 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

Diageo PLC had a gross margin of 62.91% for the quarter that ended in Dec. 2013 => 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.

Diageo PLC Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 3,5217,0738,0099,1179,6328,8678,6879,57410,14510,566

Diageo PLC Semi-Annual Data

Jun09Dec09Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13
Gross_Profit 3,8614,9823,9715,1234,3265,5404,5795,9494,9156,148
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