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Hospira Inc (NYSE:HSP)
Gross Profit
\$1,860 Mil (TTM As of Jun. 2015)

Hospira Inc's gross profit for the three months ended in Jun. 2015 was \$519 Mil. Hospira Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2015 was \$1,860 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Hospira Inc's gross profit for the three months ended in Jun. 2015 was \$519 Mil. Hospira Inc's revenue for the three months ended in Jun. 2015 was \$1,184 Mil. Therefore, Hospira Inc's Gross Margin for the quarter that ended in Jun. 2015 was 43.88%.

Hospira Inc had a gross margin of 43.88% for the quarter that ended in Jun. 2015 => Durable competitive advantage

Definition

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

Hospira Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

 Gross Profit (A: Dec. 2014 ) = Revenue - Cost of Goods Sold = 4463.7 - 2877.2 = 1,587

Hospira Inc's Gross Profit for the quarter that ended in Jun. 2015 is calculated as

 Gross Profit (Q: Jun. 2015 ) = Revenue - Cost of Goods Sold = 1183.6 - 664.2 = 519

Hospira Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2015 was 431.3 (Sep. 2014 ) + 385.6 (Dec. 2014 ) + 523.5 (Mar. 2015 ) + 519.4 (Jun. 2015 ) = \$1,860 Mil.

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

Hospira Inc's Gross Margin for the quarter that ended in Jun. 2015 is calculated as

 Gross Margin (Q: Jun. 2015 ) = Gross Profit (Q: Jun. 2015 ) / Revenue (Q: Jun. 2015 ) = (Revenue - Cost of Goods Sold) / Revenue = 519 / 1183.6 = 43.88 %

* 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

Hospira Inc had a gross margin of 43.88% for the quarter that ended in Jun. 2015 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Hospira Inc Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Gross_Profit 849 939 1,174 1,322 1,456 1,514 1,398 1,113 1,081 1,587

Hospira Inc Quarterly Data

 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Gross_Profit 150 319 290 322 370 400 431 386 524 519
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