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Health Management Associates, Inc. (NYSE:HMA)
Gross Profit
$2,235 Mil (TTM As of Sep. 2013)

Health Management Associates, Inc.'s gross profit for the three months ended in Sep. 2013 was $545 Mil. Health Management Associates, Inc.'s gross profit for the trailing twelve months (TTM) ended in Sep. 2013 was $2,235 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Health Management Associates, Inc.'s gross profit for the three months ended in Sep. 2013 was $545 Mil. Health Management Associates, Inc.'s revenue for the three months ended in Sep. 2013 was $1,421 Mil. Therefore, Health Management Associates, Inc.'s Gross Margin for the quarter that ended in Sep. 2013 was 38.34%.

Health Management Associates, Inc. had a gross margin of 38.34% for the quarter that ended in Sep. 2013 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Health Management Associates, Inc. was 100.00%. The lowest was 31.06%. And the median was 69.69%.

Warning Sign:

Health Management Associates, Inc. gross margin has been in long term decline. The average rate of decline per year is -11.5%.


Definition

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

Health Management Associates, Inc.'s Gross Profit for the fiscal year that ended in Dec. 2012 is calculated as

Gross Profit (A: Dec. 2012 )=Revenue - Cost of Goods Sold
=5865.505 - 3523.864
=2,342

Health Management Associates, Inc.'s Gross Profit for the quarter that ended in Sep. 2013 is calculated as

Gross Profit (Q: Sep. 2013 )=Revenue - Cost of Goods Sold
=1421.243 - 876.361
=545

Health Management Associates, Inc. Gross Profit for the trailing twelve months (TTM) ended in Sep. 2013 was 566.938 (Dec. 2012 ) + 566.383 (Mar. 2013 ) + 556.965 (Jun. 2013 ) + 544.882 (Sep. 2013 ) = $2,235 Mil.

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

Health Management Associates, Inc.'s Gross Margin for the quarter that ended in Sep. 2013 is calculated as

Gross Margin (Q: Sep. 2013 )=Gross Profit (Q: Sep. 2013 ) / Revenue (Q: Sep. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=545 / 1421.243
=38.34 %

* 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

Health Management Associates, Inc. had a gross margin of 38.34% for the quarter that ended in Sep. 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.

Health Management Associates, Inc. Annual Data

Sep03Sep04Sep05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 2,5309861,1153,5043,7181,9722,1282,3722,0072,342

Health Management Associates, Inc. Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
Gross_Profit 493490533591599585567566557545
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