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Hewlett-Packard Co (NYSE:HPQ)
Gross Profit
$26,006 Mil (TTM As of Jan. 2014)

Hewlett-Packard Co's gross profit for the three months ended in Jan. 2014 was $6,418 Mil. Hewlett-Packard Co's gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $26,006 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hewlett-Packard Co's gross profit for the three months ended in Jan. 2014 was $6,418 Mil. Hewlett-Packard Co's revenue for the three months ended in Jan. 2014 was $28,154 Mil. Therefore, Hewlett-Packard Co's Gross Margin for the quarter that ended in Jan. 2014 was 22.80%.

Hewlett-Packard Co had a gross margin of 22.80% for the quarter that ended in Jan. 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 24.86%.


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. 2013 is calculated as

Gross Profit (A: Oct. 2013 )=Revenue - Cost of Goods Sold
=112298 - 86380
=25,918

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

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=28154 - 21736
=6,418

Hewlett-Packard Co Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 6527 (Apr. 2013 ) + 6367 (Jul. 2013 ) + 6694 (Oct. 2013 ) + 6418 (Jan. 2014 ) = $26,006 Mil.

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

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

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=6,418 / 28154
=22.80 %

* 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 22.80% for the quarter that ended in Jan. 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross_Profit 19,09420,25622,23125,93028,66527,02830,18129,82727,97225,918

Hewlett-Packard Co Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 6,8186,7237,1526,8497,2486,3306,5276,3676,6946,418
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