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Procter & Gamble Co (NYSE:PG)
Gross Profit
$40,447 Mil (TTM As of Sep. 2014)

Procter & Gamble Co's gross profit for the three months ended in Sep. 2014 was $10,240 Mil. Procter & Gamble Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $40,447 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Procter & Gamble Co's gross profit for the three months ended in Sep. 2014 was $10,240 Mil. Procter & Gamble Co's revenue for the three months ended in Sep. 2014 was $20,792 Mil. Therefore, Procter & Gamble Co's Gross Margin for the quarter that ended in Sep. 2014 was 49.25%.

Procter & Gamble Co had a gross margin of 49.25% for the quarter that ended in Sep. 2014 => 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 49.15%.


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. 2014 is calculated as

Gross Profit (A: Jun. 2014 )=Revenue - Cost of Goods Sold
=83062 - 42460
=40,602

Procter & Gamble Co's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=20792 - 10552
=10,240

Procter & Gamble Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 11150 (Dec. 2013 ) + 9958 (Mar. 2014 ) + 9099 (Jun. 2014 ) + 10240 (Sep. 2014 ) = $40,447 Mil.

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

Procter & Gamble Co'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
=10,240 / 20792
=49.25 %

* 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 49.25% 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.

Procter & Gamble Co Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Gross_Profit 28,86935,09739,79042,21240,13141,01941,24541,28941,19040,602

Procter & Gamble Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 9,71510,38911,29510,2549,25210,25611,1509,9589,09910,240
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