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Genpact Ltd. (NYSE:G)
Gross Profit
$812 Mil (TTM As of Dec. 2013)

Genpact Ltd.'s gross profit for the three months ended in Dec. 2013 was $213 Mil. Genpact Ltd.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $812 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Genpact Ltd.'s gross profit for the three months ended in Dec. 2013 was $213 Mil. Genpact Ltd.'s revenue for the three months ended in Dec. 2013 was $558 Mil. Therefore, Genpact Ltd.'s Gross Margin for the quarter that ended in Dec. 2013 was 38.07%.

Genpact Ltd. had a gross margin of 38.07% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 12 years, the highest Gross Margin of Genpact Ltd. was 41.13%. The lowest was 34.88%. And the median was 38.16%.

Warning Sign:

Genpact Ltd. gross margin has been in long term decline. The average rate of decline per year is -1.1%.


Definition

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

Genpact Ltd.'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
=2131.997 - 1319.571
=812

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

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=558.459 - 345.842
=213

Genpact Ltd. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 192.122 (Mar. 2013 ) + 202.09 (Jun. 2013 ) + 205.597 (Sep. 2013 ) + 212.617 (Dec. 2013 ) = $812 Mil.

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

Genpact Ltd.'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
=213 / 558.459
=38.07 %

* 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

Genpact Ltd. had a gross margin of 38.07% 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.

Genpact Ltd. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 166188252307422447470596744812

Genpact Ltd. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 161175170182194198192202206213
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