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Newfield Exploration Co (NYSE:NFX)
Gross Profit
$1,601 Mil (TTM As of Mar. 2015)

Newfield Exploration Co's gross profit for the three months ended in Mar. 2015 was $225 Mil. Newfield Exploration Co's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was $1,601 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Newfield Exploration Co's gross profit for the three months ended in Mar. 2015 was $225 Mil. Newfield Exploration Co's revenue for the three months ended in Mar. 2015 was $349 Mil. Therefore, Newfield Exploration Co's Gross Margin for the quarter that ended in Mar. 2015 was 64.47%.

Newfield Exploration Co had a gross margin of 64.47% for the quarter that ended in Mar. 2015 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Newfield Exploration Co was 100.00%. The lowest was 67.95%. And the median was 100.00%.

Warning Sign:

Newfield Exploration Co gross margin has been in long term decline. The average rate of decline per year is -6.6%.


Definition

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

Newfield Exploration Co'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
=2288 - 495
=1,793

Newfield Exploration Co's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

Gross Profit (Q: Mar. 2015 )=Revenue - Cost of Goods Sold
=349 - 124
=225

Newfield Exploration Co Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 460 (Jun. 2014 ) + 453 (Sep. 2014 ) + 463 (Dec. 2014 ) + 225 (Mar. 2015 ) = $1,601 Mil.

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

Newfield Exploration Co'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
=225 / 349
=64.47 %

* 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

Newfield Exploration Co had a gross margin of 64.47% for the quarter that ended in Mar. 2015 => 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.

Newfield Exploration Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 1,7621,6731,7832,2251,3381,8832,4711,0031,4361,793

Newfield Exploration Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Gross_Profit -121270307363496460460453463225
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