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Novo Nordisk A/S (NYSE:NVO)
Gross Profit
$12,427 Mil (TTM As of Dec. 2013)

Novo Nordisk A/S's gross profit for the three months ended in Dec. 2013 was $3,340 Mil. Novo Nordisk A/S's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $12,427 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 Dec. 2013 was $3,340 Mil. Novo Nordisk A/S's revenue for the three months ended in Dec. 2013 was $3,960 Mil. Therefore, Novo Nordisk A/S's Gross Margin for the quarter that ended in Dec. 2013 was 84.33%.

Novo Nordisk A/S had a gross margin of 84.33% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Novo Nordisk A/S was 82.74%. The lowest was 71.98%. And the median was 75.85%.


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 Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=3960.21171747 - 620.551195474
=3,340

Novo Nordisk A/S Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 2860.5870021 (Mar. 2013 ) + 3119.34011934 (Jun. 2013 ) + 3107.5740944 (Sep. 2013 ) + 3339.66052199 (Dec. 2013 ) = $12,427 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 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
=3,340 / 3960.21171747
=84.33 %

* 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 84.33% 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.

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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 2,4492,6042,5382,6482,8463,1752,8613,1193,1083,340
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