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W W Grainger Inc (NYSE:GWW)
Gross Profit
$4,214 Mil (TTM As of Jun. 2014)

W W Grainger Inc's gross profit for the three months ended in Jun. 2014 was $1,081 Mil. W W Grainger Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $4,214 Mil.

Gross Margin is calculated as gross profit divided by its revenue. W W Grainger Inc's gross profit for the three months ended in Jun. 2014 was $1,081 Mil. W W Grainger Inc's revenue for the three months ended in Jun. 2014 was $2,506 Mil. Therefore, W W Grainger Inc's Gross Margin for the quarter that ended in Jun. 2014 was 43.12%.

W W Grainger Inc had a gross margin of 43.12% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of W W Grainger Inc was 43.83%. The lowest was 33.43%. And the median was 38.62%.


Definition

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

W W Grainger 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
=9437.758 - 5301.275
=4,136

W W Grainger Inc's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=2506.104 - 1425.418
=1,081

W W Grainger Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 1051.366 (Sep. 2013 ) + 1006.397 (Dec. 2013 ) + 1075.971 (Mar. 2014 ) + 1080.686 (Jun. 2014 ) = $4,214 Mil.

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

W W Grainger Inc'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
=1,081 / 2506.104
=43.12 %

* 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

W W Grainger Inc had a gross margin of 43.12% for the quarter that ended in Jun. 2014 => 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.

W W Grainger Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 1,9072,1622,3542,6042,8082,5993,0063,5113,9164,136

W W Grainger Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 9749789949701,0321,0471,0511,0061,0761,081
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