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HP Inc (NYSE:HPQ)
Gross Profit
$16,918 Mil (TTM As of Apr. 2016)

HP Inc's gross profit for the three months ended in Apr. 2016 was $2,250 Mil. HP Inc's gross profit for the trailing twelve months (TTM) ended in Apr. 2016 was $16,918 Mil.

Gross Margin is calculated as gross profit divided by its revenue. HP Inc's gross profit for the three months ended in Apr. 2016 was $2,250 Mil. HP Inc's revenue for the three months ended in Apr. 2016 was $11,588 Mil. Therefore, HP Inc's Gross Margin for the quarter that ended in Apr. 2016 was 19.42%.

HP Inc had a gross margin of 19.42% for the quarter that ended in Apr. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of HP Inc was 24.42%. The lowest was 23.08%. And the median was 23.82%.


Definition

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

HP Inc's Gross Profit for the fiscal year that ended in Oct. 2015 is calculated as

Gross Profit (A: Oct. 2015 )=Revenue - Cost of Goods Sold
=103355 - 78596
=24,759

HP Inc's Gross Profit for the quarter that ended in Apr. 2016 is calculated as

Gross Profit (Q: Apr. 2016 )=Revenue - Cost of Goods Sold
=11588 - 9338
=2,250

HP Inc Gross Profit for the trailing twelve months (TTM) ended in Apr. 2016 was 6032 (Jul. 2015 ) + 6351 (Oct. 2015 ) + 2285 (Jan. 2016 ) + 2250 (Apr. 2016 ) = $16,918 Mil.

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

HP Inc's Gross Margin for the quarter that ended in Apr. 2016 is calculated as

Gross Margin (Q: Apr. 2016 )=Gross Profit (Q: Apr. 2016 ) / Revenue (Q: Apr. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,250 / 11588
=19.42 %

* 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

HP Inc had a gross margin of 19.42% for the quarter that ended in Apr. 2016 => No sustainable 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.

HP Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
Gross_Profit 22,23125,39928,91027,02829,94429,71627,97225,91826,61524,759

HP Inc Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
Gross_Profit 6,4186,6056,6116,9812,6852,5626,0326,3512,2852,250
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