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Walgreen Co (NYSE:WAG)
Gross Profit
$21,713 Mil (TTM As of Nov. 2014)

Walgreen Co's gross profit for the three months ended in Nov. 2014 was $5,296 Mil. Walgreen Co's gross profit for the trailing twelve months (TTM) ended in Nov. 2014 was $21,713 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Walgreen Co's gross profit for the three months ended in Nov. 2014 was $5,296 Mil. Walgreen Co's revenue for the three months ended in Nov. 2014 was $19,554 Mil. Therefore, Walgreen Co's Gross Margin for the quarter that ended in Nov. 2014 was 27.08%.

Walgreen Co had a gross margin of 27.08% for the quarter that ended in Nov. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Walgreen Co was 29.29%. The lowest was 26.52%. And the median was 28.21%.


Definition

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

Walgreen Co's Gross Profit for the fiscal year that ended in Aug. 2014 is calculated as

Gross Profit (A: Aug. 2014 )=Revenue - Cost of Goods Sold
=76392 - 54823
=21,569

Walgreen Co's Gross Profit for the quarter that ended in Nov. 2014 is calculated as

Gross Profit (Q: Nov. 2014 )=Revenue - Cost of Goods Sold
=19554 - 14258
=5,296

Walgreen Co Gross Profit for the trailing twelve months (TTM) ended in Nov. 2014 was 5650 (Feb. 2014 ) + 5440 (May. 2014 ) + 5327 (Aug. 2014 ) + 5296 (Nov. 2014 ) = $21,713 Mil.

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

Walgreen Co's Gross Margin for the quarter that ended in Nov. 2014 is calculated as

Gross Margin (Q: Nov. 2014 )=Gross Profit (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=5,296 / 19554
=27.08 %

* 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

Walgreen Co had a gross margin of 27.08% for the quarter that ended in Nov. 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.

Walgreen Co Annual Data

Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14
Gross_Profit 11,78813,16915,24416,64317,61318,97620,49220,34221,11921,569

Walgreen Co Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Gross_Profit 4,8355,0995,6075,2225,1915,1525,6505,4405,3275,296
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