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GuruFocus has detected 4 Warning Signs with Toyota Motor Corp \$TM.
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Toyota Motor Corp (NYSE:TM)
Gross Profit
\$45,603 Mil (TTM As of Dec. 2016)

Toyota Motor Corp's gross profit for the three months ended in Dec. 2016 was \$9,625 Mil. Toyota Motor Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$45,603 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Toyota Motor Corp's gross profit for the three months ended in Dec. 2016 was \$9,625 Mil. Toyota Motor Corp's revenue for the three months ended in Dec. 2016 was \$61,072 Mil. Therefore, Toyota Motor Corp's Gross Margin for the quarter that ended in Dec. 2016 was 15.76%.

Toyota Motor Corp had a gross margin of 15.76% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Toyota Motor Corp was 20.41%. The lowest was 10.10%. And the median was 16.83%.

Definition

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

Toyota Motor Corp's Gross Profit for the fiscal year that ended in Mar. 2016 is calculated as

 Gross Profit (A: Mar. 2016 ) = Revenue - Cost of Goods Sold = 251507.043638 - 200169.350147 = 51,338

Toyota Motor Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 61071.5778965 - 51446.2478265 = 9,625

Toyota Motor Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 12049.4334186 (Mar. 2016 ) + 12433.562504 (Jun. 2016 ) + 11494.8474372 (Sep. 2016 ) + 9625.33007006 (Dec. 2016 ) = \$45,603 Mil.

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

Toyota Motor Corp's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

 Gross Margin (Q: Dec. 2016 ) = Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 9,625 / 61071.5778965 = 15.76 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Toyota Motor Corp had a gross margin of 15.76% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Toyota Motor Corp Annual Data

 Mar07 Mar08 Mar09 Mar10 Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Gross_Profit 40,172 47,331 21,192 24,992 29,130 26,618 36,121 47,790 44,793 51,338

Toyota Motor Corp Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 12,125 12,171 11,151 11,562 12,930 11,945 12,049 12,434 11,495 9,625
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