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Procter & Gamble Co (NYSE:PG)
Gross Profit
$41,600 Mil (TTM As of Dec. 2013)

Procter & Gamble Co's gross profit for the three months ended in Dec. 2013 was $11,150 Mil. Procter & Gamble Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $41,600 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. 2013 was $11,150 Mil. Procter & Gamble Co's revenue for the three months ended in Dec. 2013 was $22,280 Mil. Therefore, Procter & Gamble Co's Gross Margin for the quarter that ended in Dec. 2013 was 50.04%.

Procter & Gamble Co had a gross margin of 50.04% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Procter & Gamble Co was 52.03%. The lowest was 41.16%. And the median was 49.34%.


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. 2013 is calculated as

Gross Profit (A: Jun. 2013 )=Revenue - Cost of Goods Sold
=84167 - 42428
=41,739

Procter & Gamble Co's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=22280 - 11130
=11,150

Procter & Gamble Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 10254 (Mar. 2013 ) + 9801 (Jun. 2013 ) + 10395 (Sep. 2013 ) + 11150 (Dec. 2013 ) = $41,600 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. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=11,150 / 22280
=50.04 %

* 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 50.04% 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.

Procter & Gamble Co Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 26,26428,86935,09739,79042,21238,00441,01941,24541,28941,739

Procter & Gamble Co Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 10,72410,8939,9579,71510,38911,29510,2549,80110,39511,150
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