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Babcock & Wilcox Co (NYSE:BWC)
Gross Profit
$902 Mil (TTM As of Sep. 2014)

Babcock & Wilcox Co's gross profit for the three months ended in Sep. 2014 was $183 Mil. Babcock & Wilcox Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $902 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Babcock & Wilcox Co's gross profit for the three months ended in Sep. 2014 was $183 Mil. Babcock & Wilcox Co's revenue for the three months ended in Sep. 2014 was $738 Mil. Therefore, Babcock & Wilcox Co's Gross Margin for the quarter that ended in Sep. 2014 was 24.84%.

Babcock & Wilcox Co had a gross margin of 24.84% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 6 years, the highest Gross Margin of Babcock & Wilcox Co was 29.60%. The lowest was 21.20%. And the median was 23.78%.


Definition

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

Babcock & Wilcox Co'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
=3269.208 - 2301.648
=968

Babcock & Wilcox Co's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=737.902 - 554.614
=183

Babcock & Wilcox Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 385.301 (Dec. 2013 ) + 159.71 (Mar. 2014 ) + 173.698 (Jun. 2014 ) + 183.288 (Sep. 2014 ) = $902 Mil.

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

Babcock & Wilcox Co'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
=183 / 737.902
=24.84 %

* 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

Babcock & Wilcox Co had a gross margin of 24.84% 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.

Babcock & Wilcox Co Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 0000721619665674830968

Babcock & Wilcox Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 214188244186200196385160174183
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