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Power-One, Inc. (NAS:PWER)
Gross Profit
$243 Mil (TTM As of Mar. 2013)

Power-One, Inc.'s gross profit for the three months ended in Mar. 2013 was $38 Mil. Power-One, Inc.'s gross profit for the trailing twelve months (TTM) ended in Mar. 2013 was $243 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Power-One, Inc.'s gross profit for the three months ended in Mar. 2013 was $38 Mil. Power-One, Inc.'s revenue for the three months ended in Mar. 2013 was $205 Mil. Therefore, Power-One, Inc.'s Gross Margin for the quarter that ended in Mar. 2013 was 18.62%.

Power-One, Inc. had a gross margin of 18.62% for the quarter that ended in Mar. 2013 => No sustainable competitive advantage


Definition

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

Power-One, Inc.'s Gross Profit for the fiscal year that ended in Dec. 2012 is calculated as

Gross Profit (A: Dec. 2012 )=Revenue - Cost of Goods Sold
=1022.578 - 762.453
=260

Power-One, Inc.'s Gross Profit for the quarter that ended in Mar. 2013 is calculated as

Gross Profit (Q: Mar. 2013 )=Revenue - Cost of Goods Sold
=204.607 - 166.519
=38

Power-One, Inc. Gross Profit for the trailing twelve months (TTM) ended in Mar. 2013 was 97.501 (Jun. 2012 ) + 81.947 (Sep. 2012 ) + 25.693 (Dec. 2012 ) + 38.088 (Mar. 2013 ) = $243 Mil.

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

Power-One, Inc.'s Gross Margin for the quarter that ended in Mar. 2013 is calculated as

Gross Margin (Q: Mar. 2013 )=Gross Profit (Q: Mar. 2013 ) / Revenue (Q: Mar. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=38 / 204.607
=18.62 %

* 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

Power-One, Inc. had a gross margin of 18.62% for the quarter that ended in Mar. 2013 => No sustainable 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.

Power-One, Inc. Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 9598779310511196403313260

Power-One, Inc. Quarterly Data

Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13
Gross_Profit 149848769725598822638
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