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AK Steel Holding Corporation (NYSE:AKS)
Gross Profit
$463 Mil (TTM As of Dec. 2013)

AK Steel Holding Corporation's gross profit for the three months ended in Dec. 2013 was $141 Mil. AK Steel Holding Corporation's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $463 Mil.

Gross Margin is calculated as gross profit divided by its revenue. AK Steel Holding Corporation's gross profit for the three months ended in Dec. 2013 was $141 Mil. AK Steel Holding Corporation's revenue for the three months ended in Dec. 2013 was $1,465 Mil. Therefore, AK Steel Holding Corporation's Gross Margin for the quarter that ended in Dec. 2013 was 9.62%.

AK Steel Holding Corporation had a gross margin of 9.62% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of AK Steel Holding Corporation was 21.67%. The lowest was 3.83%. And the median was 13.57%.

Warning Sign:

AK Steel Holding Corporation gross margin has been in long term decline. The average rate of decline per year is -9.1%.


Definition

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

AK Steel Holding Corporation'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
=5570.4 - 5107.8
=463

AK Steel Holding Corporation's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=1464.8 - 1323.9
=141

AK Steel Holding Corporation Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 117.5 (Mar. 2013 ) + 95.3 (Jun. 2013 ) + 108.9 (Sep. 2013 ) + 140.9 (Dec. 2013 ) = $463 Mil.

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

AK Steel Holding Corporation'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
=141 / 1464.8
=9.62 %

* 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

AK Steel Holding Corporation had a gross margin of 9.62% for the quarter that ended in Dec. 2013 => No sustainable 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.

AK Steel Holding Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 6646516161,0841,153327325431395463

AK Steel Holding Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 10358100146797011895109141
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