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National Grid PLC (NYSE:NGG)
Gross Profit
$6,204 Mil (TTM As of Sep. 2014)

National Grid PLC's gross profit for the six months ended in Sep. 2014 was $2,664 Mil. National Grid PLC's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $6,204 Mil.

Gross Margin is calculated as gross profit divided by its revenue. National Grid PLC's gross profit for the six months ended in Sep. 2014 was $2,664 Mil. National Grid PLC's revenue for the six months ended in Sep. 2014 was $10,365 Mil. Therefore, National Grid PLC's Gross Margin for the quarter that ended in Sep. 2014 was 25.71%.

National Grid PLC had a gross margin of 25.71% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of National Grid PLC was 50.49%. The lowest was 25.22%. And the median was 33.14%.

Warning Sign:

National Grid PLC gross margin has been in long term decline. The average rate of decline per year is -9.2%.


Definition

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

National Grid PLC's Gross Profit for the fiscal year that ended in Mar. 2014 is calculated as

Gross Profit (A: Mar. 2014 )=Revenue - Cost of Goods Sold
=24599.6677741 - 18395.3488372
=6,204

National Grid PLC's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=10364.8208469 - 7700.3257329
=2,664

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. National Grid PLC Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was $6,204 Mil.

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

National Grid PLC's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=2,664 / 10364.8208469
=25.71 %

* 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

National Grid PLC had a gross margin of 25.71% for the quarter that ended in Sep. 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.

National Grid PLC Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Gross_Profit 08,1014,88910,1247,3648,86910,4895,6005,6626,204

National Grid PLC Semi-Annual Data

Mar10Sep10Mar11Sep11Mar12Sep12Mar13Sep13Mar14Sep14
Gross_Profit 6,7552,4667,9352,3533,2392,8103,0352,4403,6542,664
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