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Medtronic PLC (NYSE:MDT)
Gross Profit
$17,254 Mil (TTM As of Oct. 2015)

Medtronic PLC's gross profit for the three months ended in Oct. 2015 was $4,876 Mil. Medtronic PLC's gross profit for the trailing twelve months (TTM) ended in Oct. 2015 was $17,254 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Medtronic PLC's gross profit for the three months ended in Oct. 2015 was $4,876 Mil. Medtronic PLC's revenue for the three months ended in Oct. 2015 was $7,058 Mil. Therefore, Medtronic PLC's Gross Margin for the quarter that ended in Oct. 2015 was 69.08%.

Medtronic PLC had a gross margin of 69.08% for the quarter that ended in Oct. 2015 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Medtronic PLC was 76.14%. The lowest was 68.86%. And the median was 75.10%.

Warning Sign:

Medtronic PLC gross margin has been in long term decline. The average rate of decline per year is -1.6%.


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. 2015 is calculated as

Gross Profit (A: Apr. 2015 )=Revenue - Cost of Goods Sold
=20261 - 6309
=13,952

Medtronic PLC's Gross Profit for the quarter that ended in Oct. 2015 is calculated as

Gross Profit (Q: Oct. 2015 )=Revenue - Cost of Goods Sold
=7058 - 2182
=4,876

Medtronic PLC Gross Profit for the trailing twelve months (TTM) ended in Oct. 2015 was 3190 (Jan. 2015 ) + 4370 (Apr. 2015 ) + 4818 (Jul. 2015 ) + 4876 (Oct. 2015 ) = $17,254 Mil.

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

Medtronic PLC's Gross Margin for the quarter that ended in Oct. 2015 is calculated as

Gross Margin (Q: Oct. 2015 )=Gross Profit (Q: Oct. 2015 ) / Revenue (Q: Oct. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,876 / 7058
=69.08 %

* 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

Medtronic PLC had a gross margin of 69.08% for the quarter that ended in Oct. 2015 => 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 own currency.

Medtronic PLC Annual Data

Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14Apr15
Gross_Profit 8,4779,13110,06911,08112,00511,80812,29512,46412,67213,952

Medtronic PLC Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
Gross_Profit 3,0613,1043,1133,3943,1683,2243,1904,3704,8184,876
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