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Airgas Inc (NYSE:ARG)
Gross Profit
$2,851 Mil (TTM As of Jun. 2014)

Airgas Inc's gross profit for the three months ended in Jun. 2014 was $730 Mil. Airgas Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $2,851 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Airgas Inc's gross profit for the three months ended in Jun. 2014 was $730 Mil. Airgas Inc's revenue for the three months ended in Jun. 2014 was $1,314 Mil. Therefore, Airgas Inc's Gross Margin for the quarter that ended in Jun. 2014 was 55.59%.

Airgas Inc had a gross margin of 55.59% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Airgas Inc was 55.69%. The lowest was 46.21%. And the median was 51.11%.


Definition

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

Airgas Inc's Gross Profit for the fiscal year that ended in Mar. 2014 is calculated as

Gross Profit (A: Mar. 2014 )=Revenue - Cost of Goods Sold
=5072.537 - 2247.574
=2,825

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

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=1313.587 - 583.406
=730

Airgas Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 718.958 (Sep. 2013 ) + 705.176 (Dec. 2013 ) + 696.481 (Mar. 2014 ) + 730.181 (Jun. 2014 ) = $2,851 Mil.

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

Airgas Inc'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
=730 / 1313.587
=55.59 %

* 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

Airgas Inc had a gross margin of 55.59% 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.

Airgas Inc Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Gross_Profit 1,2161,4281,6382,0882,3042,1472,3382,5712,7222,825

Airgas Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 669684673677688704719705696730
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