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InterOil Corporation (NYSE:IOC)
Gross Profit
$168 Mil (TTM As of Dec. 2013)

InterOil Corporation's gross profit for the three months ended in Dec. 2013 was $49 Mil. InterOil Corporation's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $168 Mil.

Gross Margin is calculated as gross profit divided by its revenue. InterOil Corporation's gross profit for the three months ended in Dec. 2013 was $49 Mil. InterOil Corporation's revenue for the three months ended in Dec. 2013 was $399 Mil. Therefore, InterOil Corporation's Gross Margin for the quarter that ended in Dec. 2013 was 12.19%.

InterOil Corporation had a gross margin of 12.19% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of InterOil Corporation was 36.29%. The lowest was -46.95%. And the median was 5.35%.

Warning Sign:

InterOil Corporation gross margin has been in long term decline. The average rate of decline per year is -1.5%.


Definition

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

InterOil Corporation'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
=1400.129 - 1259.513
=141

InterOil Corporation's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=398.903 - 350.272
=49

InterOil Corporation Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 22.464 (Mar. 2013 ) + 66.029 (Jun. 2013 ) + 31.052 (Sep. 2013 ) + 48.631 (Dec. 2013 ) = $168 Mil.

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

InterOil Corporation'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
=49 / 398.903
=12.19 %

* 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

InterOil Corporation had a gross margin of 12.19% for the quarter that ended in Dec. 2013 => No sustainable 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.

InterOil Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit -331416433191098101141

InterOil Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 121237-59414022663149
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