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Equal Energy Ltd (NYSE:EQU)
Gross Profit
\$52.15 Mil (TTM As of Mar. 2014)

Equal Energy Ltd's gross profit for the three months ended in Mar. 2014 was \$15.27 Mil. Equal Energy Ltd's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was \$52.15 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Equal Energy Ltd's gross profit for the three months ended in Mar. 2014 was \$15.27 Mil. Equal Energy Ltd's revenue for the three months ended in Mar. 2014 was \$20.08 Mil. Therefore, Equal Energy Ltd's Gross Margin for the quarter that ended in Mar. 2014 was 76.03%.

Equal Energy Ltd had a gross margin of 76.03% for the quarter that ended in Mar. 2014 => Durable competitive advantage

Definition

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

Equal Energy Ltd'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 = 61.863 - 17.804 = 44.06

Equal Energy Ltd's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

 Gross Profit (Q: Mar. 2014 ) = Revenue - Cost of Goods Sold = 20.084 - 4.814 = 15.27

Equal Energy Ltd Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 13.877 (Jun. 2013 ) + 12.012 (Sep. 2013 ) + 10.99 (Dec. 2013 ) + 15.27 (Mar. 2014 ) = \$52.15 Mil.

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

Equal Energy Ltd's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

 Gross Margin (Q: Mar. 2014 ) = Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 ) = (Revenue - Cost of Goods Sold) / Revenue = 15.27 / 20.084 = 76.03 %

* 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

Equal Energy Ltd had a gross margin of 76.03% for the quarter that ended in Mar. 2014 => Durable competitive advantage

Related Terms

Historical Data

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

Equal Energy Ltd Annual Data

 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Gross_Profit 50.14 76.98 125.05 97.80 130.49 55.47 75.16 56.90 40.16 44.06

Equal Energy Ltd Quarterly Data

 Jun11 Sep11 Dec11 Mar12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Gross_Profit 29.81 28.46 -13.21 11.60 10.47 7.15 13.88 12.01 10.99 15.27
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