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Fortune Brands Home & Security Inc (NYSE:FBHS)
Gross Profit
$1,470 Mil (TTM As of Sep. 2014)

Fortune Brands Home & Security Inc's gross profit for the three months ended in Sep. 2014 was $378 Mil. Fortune Brands Home & Security Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $1,470 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Fortune Brands Home & Security Inc's gross profit for the three months ended in Sep. 2014 was $378 Mil. Fortune Brands Home & Security Inc's revenue for the three months ended in Sep. 2014 was $1,098 Mil. Therefore, Fortune Brands Home & Security Inc's Gross Margin for the quarter that ended in Sep. 2014 was 34.46%.

Fortune Brands Home & Security Inc had a gross margin of 34.46% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 5 years, the highest Gross Margin of Fortune Brands Home & Security Inc was 34.61%. The lowest was 29.94%. And the median was 32.51%.


Definition

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

Fortune Brands Home & Security Inc'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
=4157.4 - 2718.6
=1,439

Fortune Brands Home & Security Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=1097.7 - 719.4
=378

Fortune Brands Home & Security Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 376.7 (Dec. 2013 ) + 314.7 (Mar. 2014 ) + 400.4 (Jun. 2014 ) + 378.3 (Sep. 2014 ) = $1,470 Mil.

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

Fortune Brands Home & Security Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=378 / 1097.7
=34.46 %

* 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

Fortune Brands Home & Security Inc had a gross margin of 34.46% for the quarter that ended in Sep. 2014 => 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.

Fortune Brands Home & Security Inc Annual Data

Dec09Dec10Dec11Dec12Dec13
Gross_Profit 000009031,0519971,1701,439

Fortune Brands Home & Security Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 317302304300377385377315400378
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