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Weatherford International PLC (NYSE:WFT)
Gross Profit
$3,235 Mil (TTM As of Sep. 2014)

Weatherford International PLC's gross profit for the three months ended in Sep. 2014 was $992 Mil. Weatherford International PLC's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $3,235 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Weatherford International PLC's gross profit for the three months ended in Sep. 2014 was $992 Mil. Weatherford International PLC's revenue for the three months ended in Sep. 2014 was $3,877 Mil. Therefore, Weatherford International PLC's Gross Margin for the quarter that ended in Sep. 2014 was 25.59%.

Weatherford International PLC had a gross margin of 25.59% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Weatherford International PLC was 41.89%. The lowest was 19.40%. And the median was 31.99%.

Warning Sign:

Weatherford International PLC gross margin has been in long term decline. The average rate of decline per year is -9.6%.


Definition

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

Weatherford International PLC'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
=15263 - 12302
=2,961

Weatherford International PLC's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=3877 - 2885
=992

Weatherford International PLC Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 604 (Dec. 2013 ) + 757 (Mar. 2014 ) + 882 (Jun. 2014 ) + 992 (Sep. 2014 ) = $3,235 Mil.

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

Weatherford International PLC's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=992 / 3877
=25.59 %

* 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

Weatherford International PLC had a gross margin of 25.59% for the quarter that ended in Sep. 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.

Weatherford International PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 9731,3832,3612,7743,3582,3642,6383,3253,3602,961

Weatherford International PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 776852841831742784604757882992
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