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Goodyear Tire & Rubber Co (NAS:GT)
Gross Profit
$4,317 Mil (TTM As of Sep. 2014)

Goodyear Tire & Rubber Co's gross profit for the three months ended in Sep. 2014 was $1,141 Mil. Goodyear Tire & Rubber Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $4,317 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Goodyear Tire & Rubber Co's gross profit for the three months ended in Sep. 2014 was $1,141 Mil. Goodyear Tire & Rubber Co's revenue for the three months ended in Sep. 2014 was $4,657 Mil. Therefore, Goodyear Tire & Rubber Co's Gross Margin for the quarter that ended in Sep. 2014 was 24.50%.

Goodyear Tire & Rubber Co had a gross margin of 24.50% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Goodyear Tire & Rubber Co was 27.89%. The lowest was 16.08%. And the median was 19.19%.


Definition

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

Goodyear Tire & Rubber 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
=19540 - 15422
=4,118

Goodyear Tire & Rubber Co's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=4657 - 3516
=1,141

Goodyear Tire & Rubber Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 1101 (Dec. 2013 ) + 951 (Mar. 2014 ) + 1124 (Jun. 2014 ) + 1141 (Sep. 2014 ) = $4,317 Mil.

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

Goodyear Tire & Rubber Co'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
=1,141 / 4657
=24.50 %

* 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

Goodyear Tire & Rubber Co had a gross margin of 24.50% 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.

Goodyear Tire & Rubber Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 3,5573,5633,0153,7333,3492,6253,3803,9463,8294,118

Goodyear Tire & Rubber Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 1,0099499459131,0481,0561,1019511,1241,141
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