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Mead Johnson Nutrition Co (NYSE:MJN)
Gross Profit
$2,742 Mil (TTM As of Jun. 2014)

Mead Johnson Nutrition Co's gross profit for the three months ended in Jun. 2014 was $684 Mil. Mead Johnson Nutrition Co's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $2,742 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Mead Johnson Nutrition Co's gross profit for the three months ended in Jun. 2014 was $684 Mil. Mead Johnson Nutrition Co's revenue for the three months ended in Jun. 2014 was $1,111 Mil. Therefore, Mead Johnson Nutrition Co's Gross Margin for the quarter that ended in Jun. 2014 was 61.59%.

Mead Johnson Nutrition Co had a gross margin of 61.59% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 11 years, the highest Gross Margin of Mead Johnson Nutrition Co was 65.52%. The lowest was 61.93%. And the median was 63.41%.


Definition

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

Mead Johnson Nutrition 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
=4200.7 - 1532.8
=2,668

Mead Johnson Nutrition Co's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=1111.1 - 426.8
=684

Mead Johnson Nutrition Co Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 681.3 (Sep. 2013 ) + 668.7 (Dec. 2013 ) + 707.6 (Mar. 2014 ) + 684.3 (Jun. 2014 ) = $2,742 Mil.

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

Mead Johnson Nutrition Co's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=684 / 1111.1
=61.59 %

* 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

Mead Johnson Nutrition Co had a gross margin of 61.59% for the quarter that ended in Jun. 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.

Mead Johnson Nutrition Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 1,2941,4211,4951,6281,8031,8521,9922,3152,4162,668

Mead Johnson Nutrition Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 613640564599653673681669708684
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