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Sherwin-Williams Company (NYSE:SHW)
Gross Profit
$4,617 Mil (TTM As of Dec. 2013)

Sherwin-Williams Company's gross profit for the three months ended in Dec. 2013 was $1,124 Mil. Sherwin-Williams Company's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $4,617 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Sherwin-Williams Company's gross profit for the three months ended in Dec. 2013 was $1,124 Mil. Sherwin-Williams Company's revenue for the three months ended in Dec. 2013 was $2,457 Mil. Therefore, Sherwin-Williams Company's Gross Margin for the quarter that ended in Dec. 2013 was 45.75%.

Sherwin-Williams Company had a gross margin of 45.75% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Sherwin-Williams Company was 48.05%. The lowest was 42.72%. And the median was 44.87%.


Definition

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

Sherwin-Williams Company's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=10185.532 - 5568.966
=4,617

Sherwin-Williams Company's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=2457.058 - 1332.88
=1,124

Sherwin-Williams Company Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 962.851 (Mar. 2013 ) + 1233.579 (Jun. 2013 ) + 1295.958 (Sep. 2013 ) + 1124.178 (Dec. 2013 ) = $4,617 Mil.

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

Sherwin-Williams Company'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
=1,124 / 2457.058
=45.75 %

* 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

Sherwin-Williams Company had a gross margin of 45.75% 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.

Sherwin-Williams Company Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 2,7013,0803,4153,5993,4993,2633,4813,7454,2064,617

Sherwin-Williams Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 1,0388869101,1511,1509969631,2341,2961,124
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