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W. R. Grace & Co. (NYSE:GRA)
Gross Profit
$1,152 Mil (TTM As of Dec. 2013)

W. R. Grace & Co.'s gross profit for the three months ended in Dec. 2013 was $300 Mil. W. R. Grace & Co.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $1,152 Mil.

Gross Margin is calculated as gross profit divided by its revenue. W. R. Grace & Co.'s gross profit for the three months ended in Dec. 2013 was $300 Mil. W. R. Grace & Co.'s revenue for the three months ended in Dec. 2013 was $777 Mil. Therefore, W. R. Grace & Co.'s Gross Margin for the quarter that ended in Dec. 2013 was 38.60%.

W. R. Grace & Co. had a gross margin of 38.60% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 13 years, the highest Gross Margin of W. R. Grace & Co. was 40.08%. The lowest was 29.65%. And the median was 36.16%.


Definition

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

W. R. Grace & 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
=3060.7 - 1918.6
=1,142

W. R. Grace & Co.'s Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=776.7 - 476.9
=300

W. R. Grace & Co. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 263.8 (Mar. 2013 ) + 303.3 (Jun. 2013 ) + 284.7 (Sep. 2013 ) + 299.8 (Dec. 2013 ) = $1,152 Mil.

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

W. R. Grace & Co.'s Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=300 / 776.7
=38.60 %

* 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

W. R. Grace & Co. had a gross margin of 38.60% for the quarter that ended in Dec. 2013 => 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.

W. R. Grace & Co. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 8288809829879849259491,1611,1141,142

W. R. Grace & Co. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 316288277304285248264303285300
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