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Microsoft Corporation (NAS:MSFT)
Gross Profit
$59,646 Mil (TTM As of Dec. 2013)

Microsoft Corporation's gross profit for the three months ended in Dec. 2013 was $16,235 Mil. Microsoft Corporation's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $59,646 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Microsoft Corporation's gross profit for the three months ended in Dec. 2013 was $16,235 Mil. Microsoft Corporation's revenue for the three months ended in Dec. 2013 was $24,519 Mil. Therefore, Microsoft Corporation's Gross Margin for the quarter that ended in Dec. 2013 was 66.21%.

Microsoft Corporation had a gross margin of 66.21% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Microsoft Corporation was 91.83%. The lowest was 73.99%. And the median was 81.77%.

Warning Sign:

Microsoft Corporation gross margin has been in long term decline. The average rate of decline per year is -1.7%.


Definition

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

Microsoft Corporation's Gross Profit for the fiscal year that ended in Jun. 2013 is calculated as

Gross Profit (A: Jun. 2013 )=Revenue - Cost of Goods Sold
=77849 - 20249
=57,600

Microsoft Corporation's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=24519 - 8284
=16,235

Microsoft Corporation Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 15702 (Mar. 2013 ) + 14294 (Jun. 2013 ) + 13415 (Sep. 2013 ) + 16235 (Dec. 2013 ) = $59,646 Mil.

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

Microsoft Corporation's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=16,235 / 24519
=66.21 %

* 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

Microsoft Corporation had a gross margin of 66.21% for the quarter that ended in Dec. 2013 => 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.

Microsoft Corporation Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 30,11933,75736,63240,42948,82246,28250,08954,36656,19357,600

Microsoft Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 13,59515,24713,45513,89611,84015,76415,70214,29413,41516,235
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