Switch to:
Educational Development Corp (NAS:EDUC)
Gross Profit
$16.40 Mil (TTM As of May. 2014)

Educational Development Corp's gross profit for the three months ended in May. 2014 was $4.34 Mil. Educational Development Corp's gross profit for the trailing twelve months (TTM) ended in May. 2014 was $16.40 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Educational Development Corp's gross profit for the three months ended in May. 2014 was $4.34 Mil. Educational Development Corp's revenue for the three months ended in May. 2014 was $7.18 Mil. Therefore, Educational Development Corp's Gross Margin for the quarter that ended in May. 2014 was 60.38%.

Educational Development Corp had a gross margin of 60.38% for the quarter that ended in May. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Educational Development Corp was 64.78%. The lowest was 56.00%. And the median was 62.02%.

Warning Sign:

Educational Development Corp gross margin has been in long term decline. The average rate of decline per year is -1.7%.


Definition

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

Educational Development Corp's Gross Profit for the fiscal year that ended in Feb. 2014 is calculated as

Gross Profit (A: Feb. 2014 )=Revenue - Cost of Goods Sold
=26.097 - 10.524
=15.57

Educational Development Corp's Gross Profit for the quarter that ended in May. 2014 is calculated as

Gross Profit (Q: May. 2014 )=Revenue - Cost of Goods Sold
=7.178 - 2.844
=4.33

Educational Development Corp Gross Profit for the trailing twelve months (TTM) ended in May. 2014 was 3.054 (Aug. 2013 ) + 5.208 (Nov. 2013 ) + 3.798 (Feb. 2014 ) + 4.335 (May. 2014 ) = $16.40 Mil.

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

Educational Development Corp'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 )
=(Revenue - Cost of Goods Sold) / Revenue
=4.33 / 7.178
=60.38 %

* 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

Educational Development Corp had a gross margin of 60.38% for the quarter that ended in May. 2014 => 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.

Educational Development Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Gross_Profit 20.3120.1420.1319.7718.8218.1316.9615.7214.9915.57

Educational Development Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Gross_Profit 3.584.123.024.813.043.513.055.213.804.34
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK