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Apache Corporation (NYSE:APA)
Gross Profit
$11,809 Mil (TTM As of Jun. 2014)

Apache Corporation's gross profit for the three months ended in Jun. 2014 was $2,805 Mil. Apache Corporation's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $11,809 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Apache Corporation's gross profit for the three months ended in Jun. 2014 was $2,805 Mil. Apache Corporation's revenue for the three months ended in Jun. 2014 was $3,484 Mil. Therefore, Apache Corporation's Gross Margin for the quarter that ended in Jun. 2014 was 98.11%.

Apache Corporation had a gross margin of 98.11% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Apache Corporation was 98.74%. The lowest was 59.62%. And the median was 81.79%.

Warning Sign:

Apache Corporation gross margin has been in long term decline. The average rate of decline per year is -2.9%.


Definition

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

Apache 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
=16054 - 297
=15,757

Apache Corporation's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=3484 - 66
=3,418

Apache Corporation Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 3117 (Sep. 2013 ) + 2879 (Dec. 2013 ) + 3008 (Mar. 2014 ) + 2805 (Jun. 2014 ) = $11,809 Mil.

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

Apache Corporation'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
=3,418 / 3484
=98.11 %

* 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

Apache Corporation had a gross margin of 98.11% 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.

Apache Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 4,3866,4446,6318,17212,2336,8109,88213,98713,80712,701

Apache Corporation Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 3,7863,1963,2923,5333,1513,4103,1172,8793,0082,805
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