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Medtronic PLC (NYSE:MDT)
Gross Profit
$19,778 Mil (TTM As of Jul. 2016)

Medtronic PLC's gross profit for the three months ended in Jul. 2016 was $4,905 Mil. Medtronic PLC's gross profit for the trailing twelve months (TTM) ended in Jul. 2016 was $19,778 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Medtronic PLC's gross profit for the three months ended in Jul. 2016 was $4,905 Mil. Medtronic PLC's revenue for the three months ended in Jul. 2016 was $7,166 Mil. Therefore, Medtronic PLC's Gross Margin for the quarter that ended in Jul. 2016 was 68.45%.

Medtronic PLC had a gross margin of 68.45% for the quarter that ended in Jul. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Medtronic PLC was 76.14%. The lowest was 68.29%. And the median was 74.83%.

Warning Sign:

Medtronic PLC gross margin has been in long term decline. The average rate of decline per year is -2.4%.


Definition

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

Medtronic PLC's Gross Profit for the fiscal year that ended in Apr. 2016 is calculated as

Gross Profit (A: Apr. 2016 )=Revenue - Cost of Goods Sold
=28833 - 9142
=19,691

Medtronic PLC's Gross Profit for the quarter that ended in Jul. 2016 is calculated as

Gross Profit (Q: Jul. 2016 )=Revenue - Cost of Goods Sold
=7166 - 2261
=4,905

Medtronic PLC Gross Profit for the trailing twelve months (TTM) ended in Jul. 2016 was 4876 (Oct. 2015 ) + 4793 (Jan. 2016 ) + 5204 (Apr. 2016 ) + 4905 (Jul. 2016 ) = $19,778 Mil.

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

Medtronic PLC's Gross Margin for the quarter that ended in Jul. 2016 is calculated as

Gross Margin (Q: Jul. 2016 )=Gross Profit (Q: Jul. 2016 ) / Revenue (Q: Jul. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,905 / 7166
=68.45 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Medtronic PLC had a gross margin of 68.45% for the quarter that ended in Jul. 2016 => Durable 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 local exchange's currency.

Medtronic PLC Annual Data

Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
Gross_Profit 9,13110,06911,08112,00511,80812,29512,46412,67213,95219,691

Medtronic PLC Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
Gross_Profit 3,1683,2243,1904,3704,8184,8764,7935,2044,9055,019
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