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ITT Corp (NYSE:ITT)
Gross Profit
$866 Mil (TTM As of Dec. 2014)

ITT Corp's gross profit for the three months ended in Dec. 2014 was $217 Mil. ITT Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $866 Mil.

Gross Margin is calculated as gross profit divided by its revenue. ITT Corp's gross profit for the three months ended in Dec. 2014 was $217 Mil. ITT Corp's revenue for the three months ended in Dec. 2014 was $660 Mil. Therefore, ITT Corp's Gross Margin for the quarter that ended in Dec. 2014 was 32.86%.

ITT Corp had a gross margin of 32.86% for the quarter that ended in Dec. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of ITT Corp was 38.02%. The lowest was 24.21%. And the median was 31.44%.


Definition

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

ITT Corp'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
=2654.6 - 1788.2
=866

ITT Corp's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=660 - 443.1
=217

ITT Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 214.8 (Mar. 2014 ) + 214.8 (Jun. 2014 ) + 219.9 (Sep. 2014 ) + 216.9 (Dec. 2014 ) = $866 Mil.

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

ITT Corp's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=217 / 660
=32.86 %

* 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

ITT Corp had a gross margin of 32.86% for the quarter that ended in Dec. 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.

ITT Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 1,9682,1902,5683,2553,024604645680800866

ITT Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Gross_Profit 166173191198203209215215220217
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