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AvalonBay Communities Inc (NYSE:AVB)
Gross Profit
$962 Mil (TTM As of Dec. 2013)

AvalonBay Communities Inc's gross profit for the three months ended in Dec. 2013 was $247 Mil. AvalonBay Communities Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $962 Mil.

Gross Margin is calculated as gross profit divided by its revenue. AvalonBay Communities Inc's gross profit for the three months ended in Dec. 2013 was $247 Mil. AvalonBay Communities Inc's revenue for the three months ended in Dec. 2013 was $382 Mil. Therefore, AvalonBay Communities Inc's Gross Margin for the quarter that ended in Dec. 2013 was 64.47%.

AvalonBay Communities Inc had a gross margin of 64.47% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of AvalonBay Communities Inc was 65.07%. The lowest was 60.36%. And the median was 60.58%.


Definition

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

AvalonBay Communities Inc'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
=1462.921 - 511.019
=952

AvalonBay Communities Inc's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=382.45 - 135.899
=247

AvalonBay Communities Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 205.197 (Mar. 2013 ) + 257.14 (Jun. 2013 ) + 252.799 (Sep. 2013 ) + 246.551 (Dec. 2013 ) = $962 Mil.

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

AvalonBay Communities Inc's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=247 / 382.45
=64.47 %

* 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

AvalonBay Communities Inc had a gross margin of 64.47% for the quarter that ended in Dec. 2013 => 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.

AvalonBay Communities Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 000464491502509586644952

AvalonBay Communities Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 152146158161168163205257253247
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