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Eastman Chemical Company (NYSE:EMN)
Gross Profit
$2,776 Mil (TTM As of Dec. 2013)

Eastman Chemical Company's gross profit for the three months ended in Dec. 2013 was $794 Mil. Eastman Chemical Company's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $2,776 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Eastman Chemical Company's gross profit for the three months ended in Dec. 2013 was $794 Mil. Eastman Chemical Company's revenue for the three months ended in Dec. 2013 was $2,265 Mil. Therefore, Eastman Chemical Company's Gross Margin for the quarter that ended in Dec. 2013 was 35.06%.

Eastman Chemical Company had a gross margin of 35.06% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Eastman Chemical Company was 35.95%. The lowest was 13.97%. And the median was 20.96%.


Definition

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

Eastman Chemical Company'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
=9350 - 6574
=2,776

Eastman Chemical Company's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=2265 - 1471
=794

Eastman Chemical Company Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 616 (Mar. 2013 ) + 677 (Jun. 2013 ) + 689 (Sep. 2013 ) + 794 (Dec. 2013 ) = $2,776 Mil.

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

Eastman Chemical Company'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
=794 / 2265
=35.06 %

* 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

Eastman Chemical Company had a gross margin of 35.06% for the quarter that ended in Dec. 2013 => 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.

Eastman Chemical Company Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 9781,3601,2651,1921,1261,0321,4591,5691,7622,776

Eastman Chemical Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 433204431481525325616677689794
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