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Ultra Petroleum Corp (NYSE:UPL)
Gross Profit
\$872 Mil (TTM As of Dec. 2014)

Ultra Petroleum Corp's gross profit for the three months ended in Dec. 2014 was \$216 Mil. Ultra Petroleum Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was \$872 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Ultra Petroleum Corp's gross profit for the three months ended in Dec. 2014 was \$216 Mil. Ultra Petroleum Corp's revenue for the three months ended in Dec. 2014 was \$319 Mil. Therefore, Ultra Petroleum Corp's Gross Margin for the quarter that ended in Dec. 2014 was 78.72%.

Ultra Petroleum Corp had a gross margin of 78.72% for the quarter that ended in Dec. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Ultra Petroleum Corp was 88.25%. The lowest was 66.83%. And the median was 78.68%.

Warning Sign:

Ultra Petroleum Corp gross margin has been in long term decline. The average rate of decline per year is -3.2%.

Definition

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

Ultra Petroleum Corp'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 = 1230.02 - 234.207 = 996

Ultra Petroleum Corp's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

 Gross Profit (Q: Dec. 2014 ) = Revenue - Cost of Goods Sold = 319.05 - 67.889 = 251

Ultra Petroleum Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 240.996 (Mar. 2014 ) + 212.712 (Jun. 2014 ) + 201.461 (Sep. 2014 ) + 216.44 (Dec. 2014 ) = \$872 Mil.

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

Ultra Petroleum Corp's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

 Gross Margin (Q: Dec. 2014 ) = Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 ) = (Revenue - Cost of Goods Sold) / Revenue = 251 / 319.05 = 78.72 %

* 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

Ultra Petroleum Corp had a gross margin of 78.72% for the quarter that ended in Dec. 2014 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Ultra Petroleum Corp Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Gross_Profit 370 416 451 881 497 864 832 541 638 872

Ultra Petroleum Corp Quarterly Data

 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Gross_Profit 133 151 153 184 148 152 241 213 201 216
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