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Hewlett-Packard Co (NYSE:HPQ)
Gross Profit
$26,615 Mil (TTM As of Oct. 2014)

Hewlett-Packard Co's gross profit for the three months ended in Oct. 2014 was $6,981 Mil. Hewlett-Packard Co's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $26,615 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hewlett-Packard Co's gross profit for the three months ended in Oct. 2014 was $6,981 Mil. Hewlett-Packard Co's revenue for the three months ended in Oct. 2014 was $28,406 Mil. Therefore, Hewlett-Packard Co's Gross Margin for the quarter that ended in Oct. 2014 was 24.58%.

Hewlett-Packard Co had a gross margin of 24.58% for the quarter that ended in Oct. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Hewlett-Packard Co was 36.50%. The lowest was 23.08%. And the median was 24.56%.


Definition

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

Hewlett-Packard Co's Gross Profit for the fiscal year that ended in Oct. 2014 is calculated as

Gross Profit (A: Oct. 2014 )=Revenue - Cost of Goods Sold
=111454 - 84839
=26,615

Hewlett-Packard Co's Gross Profit for the quarter that ended in Oct. 2014 is calculated as

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=28406 - 21425
=6,981

Hewlett-Packard Co Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 6418 (Jan. 2014 ) + 6605 (Apr. 2014 ) + 6611 (Jul. 2014 ) + 6981 (Oct. 2014 ) = $26,615 Mil.

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

Hewlett-Packard Co's Gross Margin for the quarter that ended in Oct. 2014 is calculated as

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=6,981 / 28406
=24.58 %

* 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

Hewlett-Packard Co had a gross margin of 24.58% for the quarter that ended in Oct. 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.

Hewlett-Packard Co Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
Gross_Profit 20,25622,23125,93028,66527,02829,94429,71627,97225,91826,615

Hewlett-Packard Co Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 6,8497,2486,3306,5276,3676,6946,4186,6056,6116,981
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