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Accenture PLC (NYSE:ACN)
Gross Margin
30.78% (As of May. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Accenture PLC's gross profit for the three months ended in May. 2014 was $2,536 Mil. Accenture PLC's revenue for the three months ended in May. 2014 was $8,240 Mil. Therefore, Accenture PLC's Gross Margin for the quarter that ended in May. 2014 was 30.78%.

ACN' s 10-Year Gross Margin Range
Min: 27.4   Max: 40.15
Current: 30.87

27.4
40.15

During the past 13 years, the highest Gross Margin of Accenture PLC was 40.15%. The lowest was 27.40%. And the median was 30.54%.

ACN's Gross Marginis ranked lower than
100% of the Companies
in the Global Information Technology Services industry.

( Industry Median: vs. ACN: 30.87 )

Accenture PLC had a gross margin of 30.78% for the quarter that ended in May. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Accenture PLC was 1.30% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Accenture PLC's Gross Margin for the fiscal year that ended in Aug. 2013 is calculated as

Gross Margin (A: Aug. 2013 )=Gross Profit (A: Aug. 2013 ) / Revenue (A: Aug. 2013 )
=9384.2 / 30394.285
=(Revenue - Cost of Goods Sold) / Revenue
=(30394.285 - 21010.11) / 30394.285
=30.87 %

Accenture PLC's Gross Margin for the quarter that ended in May. 2014 is calculated as

Gross Margin (Q: May. 2014 )=Gross Profit (Q: May. 2014 ) / Revenue (Q: May. 2014 )
=2536.4 / 8240.18
=(Revenue - Cost of Goods Sold) / Revenue
=(8240.18 - 5703.823) / 8240.18
=30.78 %

* 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

Accenture PLC had a gross margin of 30.78% for the quarter that ended in May. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Accenture PLC Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
Gross Margin 30.5429.7927.4028.1628.3929.5231.4030.6630.1830.87

Accenture PLC Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Gross Margin 29.1531.0330.8630.8629.7631.6331.2231.4029.4730.78
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