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Forest Laboratories Inc (NYSE:FRX)
Gross Profit
$2,898 Mil (TTM As of Mar. 2014)

Forest Laboratories Inc's gross profit for the three months ended in Mar. 2014 was $843 Mil. Forest Laboratories Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $2,898 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Forest Laboratories Inc's gross profit for the three months ended in Mar. 2014 was $843 Mil. Forest Laboratories Inc's revenue for the three months ended in Mar. 2014 was $1,092 Mil. Therefore, Forest Laboratories Inc's Gross Margin for the quarter that ended in Mar. 2014 was 77.18%.

Forest Laboratories Inc had a gross margin of 77.18% for the quarter that ended in Mar. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Forest Laboratories Inc was 84.32%. The lowest was 75.81%. And the median was 78.29%.


Definition

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

Forest Laboratories Inc's Gross Profit for the fiscal year that ended in Mar. 2014 is calculated as

Gross Profit (A: Mar. 2014 )=Revenue - Cost of Goods Sold
=3646.899 - 760.642
=2,886

Forest Laboratories Inc's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=1092.278 - 249.287
=843

Forest Laboratories Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 667.568 (Jun. 2013 ) + 691.537 (Sep. 2013 ) + 696.126 (Dec. 2013 ) + 842.991 (Mar. 2014 ) = $2,898 Mil.

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

Forest Laboratories Inc'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
=843 / 1092.278
=77.18 %

* 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

Forest Laboratories Inc had a gross margin of 77.18% for the quarter that ended in Mar. 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.

Forest Laboratories Inc Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Gross_Profit 2,4722,3112,6963,0363,1063,2693,4563,5882,4452,886

Forest Laboratories Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross_Profit 947838653611563636668692696843
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