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Procter & Gamble Co (NYSE:PG)
Gross Profit
$34,178 Mil (TTM As of Dec. 2015)

Procter & Gamble Co's gross profit for the three months ended in Dec. 2015 was $8,455 Mil. Procter & Gamble Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2015 was $34,178 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Procter & Gamble Co's gross profit for the three months ended in Dec. 2015 was $8,455 Mil. Procter & Gamble Co's revenue for the three months ended in Dec. 2015 was $16,915 Mil. Therefore, Procter & Gamble Co's Gross Margin for the quarter that ended in Dec. 2015 was 49.99%.

Procter & Gamble Co had a gross margin of 49.99% for the quarter that ended in Dec. 2015 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Procter & Gamble Co was 52.03%. The lowest was 49.03%. And the median was 50.37%.

Warning Sign:

Procter & Gamble Co gross margin has been in long term decline. The average rate of decline per year is -1.1%.


Definition

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

Procter & Gamble Co's Gross Profit for the fiscal year that ended in Jun. 2015 is calculated as

Gross Profit (A: Jun. 2015 )=Revenue - Cost of Goods Sold
=76279 - 38876
=37,403

Procter & Gamble Co's Gross Profit for the quarter that ended in Dec. 2015 is calculated as

Gross Profit (Q: Dec. 2015 )=Revenue - Cost of Goods Sold
=16915 - 8460
=8,455

Procter & Gamble Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2015 was 8815 (Mar. 2015 ) + 8533 (Jun. 2015 ) + 8375 (Sep. 2015 ) + 8455 (Dec. 2015 ) = $34,178 Mil.

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

Procter & Gamble Co's Gross Margin for the quarter that ended in Dec. 2015 is calculated as

Gross Margin (Q: Dec. 2015 )=Gross Profit (Q: Dec. 2015 ) / Revenue (Q: Dec. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=8,455 / 16915
=49.99 %

* 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

Procter & Gamble Co had a gross margin of 49.99% for the quarter that ended in Dec. 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.

Procter & Gamble Co Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
Gross_Profit 35,09739,79042,21238,00441,01941,24541,28941,19039,50037,403

Procter & Gamble Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Gross_Profit 10,25610,6259,6019,3089,0378,9378,8158,5338,3758,455
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