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Rite Aid Corp (NYSE:RAD)
Gross Profit
$7,384 Mil (TTM As of Aug. 2014)

Rite Aid Corp's gross profit for the three months ended in Aug. 2014 was $1,895 Mil. Rite Aid Corp's gross profit for the trailing twelve months (TTM) ended in Aug. 2014 was $7,384 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Rite Aid Corp's gross profit for the three months ended in Aug. 2014 was $1,895 Mil. Rite Aid Corp's revenue for the three months ended in Aug. 2014 was $6,523 Mil. Therefore, Rite Aid Corp's Gross Margin for the quarter that ended in Aug. 2014 was 29.05%.

Rite Aid Corp had a gross margin of 29.05% for the quarter that ended in Aug. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Rite Aid Corp was 28.93%. The lowest was 22.87%. And the median was 26.86%.


Definition

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

Rite Aid Corp's Gross Profit for the fiscal year that ended in Feb. 2014 is calculated as

Gross Profit (A: Feb. 2014 )=Revenue - Cost of Goods Sold
=25526.413 - 18202.679
=7,324

Rite Aid Corp's Gross Profit for the quarter that ended in Aug. 2014 is calculated as

Gross Profit (Q: Aug. 2014 )=Revenue - Cost of Goods Sold
=6522.584 - 4628.005
=1,895

Rite Aid Corp Gross Profit for the trailing twelve months (TTM) ended in Aug. 2014 was 1800.666 (Nov. 2013 ) + 1885.716 (Feb. 2014 ) + 1802.979 (May. 2014 ) + 1894.579 (Aug. 2014 ) = $7,384 Mil.

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

Rite Aid Corp's Gross Margin for the quarter that ended in Aug. 2014 is calculated as

Gross Margin (Q: Aug. 2014 )=Gross Profit (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,895 / 6522.584
=29.05 %

* 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

Rite Aid Corp had a gross margin of 29.05% for the quarter that ended in Aug. 2014 => Competition eroding margins


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.

Rite Aid Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Gross_Profit 4,6144,6994,6896,6387,0366,8246,6936,7937,3187,324

Rite Aid Corp Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Gross_Profit 1,7491,7101,8112,0481,8211,8161,8011,8861,8031,895
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