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Aetna Inc  (NYSE:AET) Gross Profit: $16,399 Mil (TTM As of Jun. 2017)

Aetna Inc's gross profit for the three months ended in Jun. 2017 was $4,407 Mil. Aetna Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2017 was $16,399 Mil.

Gross Margin % is calculated as gross profit divided by its revenue. Aetna Inc's gross profit for the three months ended in Jun. 2017 was $4,407 Mil. Aetna Inc's Revenue for the three months ended in Jun. 2017 was $15,523 Mil. Therefore, Aetna Inc's Gross Margin % for the quarter that ended in Jun. 2017 was 28.39%.

Aetna Inc had a gross margin of 28.39% for the quarter that ended in Jun. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin % of Aetna Inc was 30.34%. The lowest was 24.81%. And the median was 26.85%.

Warning Sign:

Aetna Inc gross margin has been in long term decline. The average rate of decline per year is -1.7%.


Historical Data

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

* Premium members only.

Aetna Inc Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9,919.40 12,048.20 15,091.00 16,504.00 16,799.00

Aetna Inc Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4,194.70 4,154.80 4,132.70 3,704.00 4,407.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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

Aetna Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=63155 - 46356
=16,799

Aetna Inc's Gross Profit for the quarter that ended in Jun. 2017 is calculated as

Gross Profit (Q: Jun. 2017 )=Revenue - Cost of Goods Sold
=15523 - 11116
=4,407

Gross Profit for the trailing twelve months (TTM) ended in Jun. 2017 was 4154.8 (Sep. 2016 ) + 4132.7 (Dec. 2016 ) + 3704 (Mar. 2017 ) + 4407 (Jun. 2017 ) = $16,399 Mil.

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

Aetna Inc's Gross Margin % for the quarter that ended in Jun. 2017 is calculated as

Gross Margin % (Q: Jun. 2017 )=Gross Profit (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=4,407 / 15523
=28.39 %

* 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

Aetna Inc had a gross margin of 28.39% for the quarter that ended in Jun. 2017 => Competition eroding margins


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