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Encana Corp (NYSE:ECA)
Gross Profit
$3,367 Mil (TTM As of Jun. 2015)

Encana Corp's gross profit for the three months ended in Jun. 2015 was $216 Mil. Encana Corp's gross profit for the trailing twelve months (TTM) ended in Jun. 2015 was $3,367 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Encana Corp's gross profit for the three months ended in Jun. 2015 was $216 Mil. Encana Corp's revenue for the three months ended in Jun. 2015 was $830 Mil. Therefore, Encana Corp's Gross Margin for the quarter that ended in Jun. 2015 was 29.16%.

Encana Corp had a gross margin of 29.16% for the quarter that ended in Jun. 2015 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Encana Corp was 68.69%. The lowest was 42.78%. And the median was 56.18%.

Warning Sign:

Encana Corp gross margin has been in long term decline. The average rate of decline per year is -4%.


Definition

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

Encana 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
=8019 - 2696
=5,323

Encana Corp's Gross Profit for the quarter that ended in Jun. 2015 is calculated as

Gross Profit (Q: Jun. 2015 )=Revenue - Cost of Goods Sold
=830 - 588
=242

Encana Corp Gross Profit for the trailing twelve months (TTM) ended in Jun. 2015 was 1234 (Sep. 2014 ) + 1337 (Dec. 2014 ) + 580 (Mar. 2015 ) + 216 (Jun. 2015 ) = $3,367 Mil.

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

Encana Corp's Gross Margin for the quarter that ended in Jun. 2015 is calculated as

Gross Margin (Q: Jun. 2015 )=Gross Profit (Q: Jun. 2015 ) / Revenue (Q: Jun. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=242 / 830
=29.16 %

* 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

Encana Corp had a gross margin of 29.16% for the quarter that ended in Jun. 2015 => Competition eroding margins


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.

Encana Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 8,13110,8139,28414,4626,5765,9945,4402,6812,9484,455

Encana Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Gross_Profit 3541,2816916221,0498351,2341,337580216
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