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Novo Nordisk A/S (NYSE:NVO)
Gross Profit
$12,926 Mil (TTM As of Sep. 2014)

Novo Nordisk A/S's gross profit for the three months ended in Sep. 2014 was $3,205 Mil. Novo Nordisk A/S's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $12,926 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Novo Nordisk A/S's gross profit for the three months ended in Sep. 2014 was $3,205 Mil. Novo Nordisk A/S's revenue for the three months ended in Sep. 2014 was $3,789 Mil. Therefore, Novo Nordisk A/S's Gross Margin for the quarter that ended in Sep. 2014 was 84.60%.

Novo Nordisk A/S had a gross margin of 84.60% for the quarter that ended in Sep. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Novo Nordisk A/S was 83.08%. The lowest was 71.64%. And the median was 75.38%.


Definition

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

Novo Nordisk A/S's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=15253.1483847 - 2580.76291294
=12,672

Novo Nordisk A/S's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=3788.80506786 - 583.417059755
=3,205

Novo Nordisk A/S Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 3339.66052199 (Dec. 2013 ) + 3121.90159083 (Mar. 2014 ) + 3259.34261394 (Jun. 2014 ) + 3205.38800811 (Sep. 2014 ) = $12,926 Mil.

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

Novo Nordisk A/S'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
=3,205 / 3788.80506786
=84.60 %

* 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

Novo Nordisk A/S had a gross margin of 84.60% for the quarter that ended in Sep. 2014 => 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.

Novo Nordisk A/S Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 3,7263,9905,0846,3426,3137,7888,8069,33311,51012,672

Novo Nordisk A/S Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 2,6482,8463,1752,8613,1193,1083,3403,1223,2593,205
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