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Freeport-McMoRan Inc (NYSE:FCX)
Gross Profit
$-2,150 Mil (TTM As of Mar. 2015)

Freeport-McMoRan Inc's gross profit for the three months ended in Mar. 2015 was $-2,802 Mil. Freeport-McMoRan Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was $-2,150 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Freeport-McMoRan Inc's gross profit for the three months ended in Mar. 2015 was $-2,802 Mil. Freeport-McMoRan Inc's revenue for the three months ended in Mar. 2015 was $4,153 Mil. Therefore, Freeport-McMoRan Inc's Gross Margin for the quarter that ended in Mar. 2015 was -67.47%.

Freeport-McMoRan Inc had a gross margin of -67.47% for the quarter that ended in Mar. 2015 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Freeport-McMoRan Inc was 60.61%. The lowest was 9.02%. And the median was 48.19%.

Warning Sign:

Freeport-McMoRan Inc gross margin has been in long term decline. The average rate of decline per year is -25%.


Definition

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

Freeport-McMoRan Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=21438 - 19504
=1,934

Freeport-McMoRan Inc's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

Gross Profit (Q: Mar. 2015 )=Revenue - Cost of Goods Sold
=4153 - 6955
=-2,802

Freeport-McMoRan Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 1427 (Jun. 2014 ) + 1291 (Sep. 2014 ) + -2066 (Dec. 2014 ) + -2802 (Mar. 2015 ) = $-2,150 Mil.

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

Freeport-McMoRan Inc's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

Gross Margin (Q: Mar. 2015 )=Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=-2,802 / 4153
=-67.47 %

* 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

Freeport-McMoRan Inc had a gross margin of -67.47% for the quarter that ended in Mar. 2015 => No sustainable 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.

Freeport-McMoRan Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 2,5333,2547,1664,8166,9919,6119,9606,4496,2841,934

Freeport-McMoRan Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Gross_Profit 1,4501,5359051,9141,9301,2821,4271,291-2,066-2,802
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