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GuruFocus has detected 4 Warning Signs with FMC Corp $FMC.
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FMC Corp (NYSE:FMC)
Gross Profit
$1,200 Mil (TTM As of Dec. 2016)

FMC Corp's gross profit for the three months ended in Dec. 2016 was $338 Mil. FMC Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,200 Mil.

Gross Margin is calculated as gross profit divided by its revenue. FMC Corp's gross profit for the three months ended in Dec. 2016 was $338 Mil. FMC Corp's revenue for the three months ended in Dec. 2016 was $866 Mil. Therefore, FMC Corp's Gross Margin for the quarter that ended in Dec. 2016 was 39.00%.

FMC Corp had a gross margin of 39.00% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of FMC Corp was 36.55%. The lowest was 30.49%. And the median was 33.89%.


Definition

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

FMC Corp's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=3282.4 - 2082.6
=1,200

FMC Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=865.6 - 528
=338

FMC Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 281.4 (Mar. 2016 ) + 301.3 (Jun. 2016 ) + 279.5 (Sep. 2016 ) + 337.6 (Dec. 2016 ) = $1,200 Mil.

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

FMC Corp's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=338 / 865.6
=39.00 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

FMC Corp had a gross margin of 39.00% for the quarter that ended in Dec. 2016 => 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 local exchange's currency.

FMC Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 8039818831,0511,1671,3411,3401,3751,0751,200

FMC Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 324365251306220299281301280338
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