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Layne Christensen Co (NAS:LAYN)
Gross Profit
\$111.3 Mil (TTM As of Apr. 2016)

Layne Christensen Co's gross profit for the three months ended in Apr. 2016 was \$29.4 Mil. Layne Christensen Co's gross profit for the trailing twelve months (TTM) ended in Apr. 2016 was \$111.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Layne Christensen Co's gross profit for the three months ended in Apr. 2016 was \$29.4 Mil. Layne Christensen Co's revenue for the three months ended in Apr. 2016 was \$159.7 Mil. Therefore, Layne Christensen Co's Gross Margin for the quarter that ended in Apr. 2016 was 18.39%.

Layne Christensen Co had a gross margin of 18.39% for the quarter that ended in Apr. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Layne Christensen Co was 26.52%. The lowest was 15.23%. And the median was 21.89%.

Warning Sign:

Layne Christensen Co gross margin has been in long term decline. The average rate of decline per year is -7.1%.

Definition

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

Layne Christensen Co's Gross Profit for the fiscal year that ended in Jan. 2016 is calculated as

 Gross Profit (A: Jan. 2016 ) = Revenue - Cost of Goods Sold = 683.01 - 570.078 = 112.9

Layne Christensen Co's Gross Profit for the quarter that ended in Apr. 2016 is calculated as

 Gross Profit (Q: Apr. 2016 ) = Revenue - Cost of Goods Sold = 159.739 - 130.369 = 29.4

Layne Christensen Co Gross Profit for the trailing twelve months (TTM) ended in Apr. 2016 was 25.068 (Jul. 2015 ) + 30.238 (Oct. 2015 ) + 26.586 (Jan. 2016 ) + 29.37 (Apr. 2016 ) = \$111.3 Mil.

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

Layne Christensen Co's Gross Margin for the quarter that ended in Apr. 2016 is calculated as

 Gross Margin (Q: Apr. 2016 ) = Gross Profit (Q: Apr. 2016 ) / Revenue (Q: Apr. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 29.4 / 159.739 = 18.39 %

* 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

Layne Christensen Co had a gross margin of 18.39% for the quarter that ended in Apr. 2016 => No sustainable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Layne Christensen Co Annual Data

 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Gross_Profit 186.4 230.3 252.0 204.9 223.5 236.9 177.5 127.0 109.7 112.9

Layne Christensen Co Quarterly Data

 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Gross_Profit 21.0 22.7 28.9 36.1 23.8 31.0 25.1 30.2 26.6 29.4
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