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Dow Chemical Co (NYSE:DOW)
Gross Profit
$9,637 Mil (TTM As of Jun. 2014)

Dow Chemical Co's gross profit for the three months ended in Jun. 2014 was $2,573 Mil. Dow Chemical Co's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $9,637 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Dow Chemical Co's gross profit for the three months ended in Jun. 2014 was $2,573 Mil. Dow Chemical Co's revenue for the three months ended in Jun. 2014 was $14,917 Mil. Therefore, Dow Chemical Co's Gross Margin for the quarter that ended in Jun. 2014 was 17.25%.

Dow Chemical Co had a gross margin of 17.25% for the quarter that ended in Jun. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Dow Chemical Co was 40.93%. The lowest was 9.50%. And the median was 15.47%.


Definition

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

Dow Chemical Co's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=57080 - 47594
=9,486

Dow Chemical Co's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=14917 - 12344
=2,573

Dow Chemical Co Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 2018 (Sep. 2013 ) + 2318 (Dec. 2013 ) + 2728 (Mar. 2014 ) + 2573 (Jun. 2014 ) = $9,637 Mil.

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

Dow Chemical Co's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,573 / 14917
=17.25 %

* 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

Dow Chemical Co had a gross margin of 17.25% for the quarter that ended in Jun. 2014 => No sustainable 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.

Dow Chemical Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 5,9178,0317,5987,1135,4485,7277,8948,9568,9949,486

Dow Chemical Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 2,4342,3132,2691,9782,6762,4742,0182,3182,7282,573
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