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Zimmer Holdings Inc (NYSE:ZMH)
Gross Profit
$3,423 Mil (TTM As of Mar. 2015)

Zimmer Holdings Inc's gross profit for the three months ended in Mar. 2015 was $856 Mil. Zimmer Holdings Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was $3,423 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Zimmer Holdings Inc's gross profit for the three months ended in Mar. 2015 was $856 Mil. Zimmer Holdings Inc's revenue for the three months ended in Mar. 2015 was $1,134 Mil. Therefore, Zimmer Holdings Inc's Gross Margin for the quarter that ended in Mar. 2015 was 75.43%.

Zimmer Holdings Inc had a gross margin of 75.43% for the quarter that ended in Mar. 2015 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Zimmer Holdings Inc was 77.68%. The lowest was 67.73%. And the median was 74.84%.

Warning Sign:

Zimmer Holdings Inc gross margin has been in long term decline. The average rate of decline per year is -2%.


Definition

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

Zimmer Holdings Inc's Gross Profit for the fiscal year that ended in May. 2014 is calculated as

Gross Profit (A: May. 2014 )=Revenue - Cost of Goods Sold
=3223.4 - 1040.2
=2,183

Zimmer Holdings Inc's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

Gross Profit (Q: Mar. 2015 )=Revenue - Cost of Goods Sold
=1134.4 - 278.7
=856

Zimmer Holdings Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 849.7 (Jun. 2014 ) + 807.7 (Sep. 2014 ) + 910 (Dec. 2014 ) + 855.7 (Mar. 2015 ) = $3,423 Mil.

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

Zimmer Holdings Inc's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

Gross Margin (Q: Mar. 2015 )=Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=856 / 1134.4
=75.43 %

* 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

Zimmer Holdings Inc had a gross margin of 75.43% for the quarter that ended in Mar. 2015 => 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.

Zimmer Holdings Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13May14
Gross_Profit 2,5472,7153,0223,1243,1053,2083,3303,3473,3372,183

Zimmer Holdings Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14May14Jun14Sep14Dec14Mar15
Gross_Profit 8468467469008580850808910856
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