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Layne Christensen Company (NAS:LAYN)
Gross Profit
$149 Mil (TTM As of Oct. 2013)

Layne Christensen Company's gross profit for the three months ended in Oct. 2013 was $40 Mil. Layne Christensen Company's gross profit for the trailing twelve months (TTM) ended in Oct. 2013 was $149 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Layne Christensen Company's gross profit for the three months ended in Oct. 2013 was $40 Mil. Layne Christensen Company's revenue for the three months ended in Oct. 2013 was $216 Mil. Therefore, Layne Christensen Company's Gross Margin for the quarter that ended in Oct. 2013 was 18.27%.

Layne Christensen Company had a gross margin of 18.27% for the quarter that ended in Oct. 2013 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Layne Christensen Company was 29.42%. The lowest was 18.61%. And the median was 26.41%.

Warning Sign:

Layne Christensen Company gross margin has been in long term decline. The average rate of decline per year is -5.9%.


Definition

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

Layne Christensen Company's Gross Profit for the fiscal year that ended in Jan. 2013 is calculated as

Gross Profit (A: Jan. 2013 )=Revenue - Cost of Goods Sold
=1075.624 - 875.439
=200

Layne Christensen Company's Gross Profit for the quarter that ended in Oct. 2013 is calculated as

Gross Profit (Q: Oct. 2013 )=Revenue - Cost of Goods Sold
=216.462 - 176.908
=40

Layne Christensen Company Gross Profit for the trailing twelve months (TTM) ended in Oct. 2013 was 32.481 (Jan. 2013 ) + 36.891 (Apr. 2013 ) + 39.891 (Jul. 2013 ) + 39.554 (Oct. 2013 ) = $149 Mil.

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

Layne Christensen Company's Gross Margin for the quarter that ended in Oct. 2013 is calculated as

Gross Margin (Q: Oct. 2013 )=Gross Profit (Q: Oct. 2013 ) / Revenue (Q: Oct. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=40 / 216.462
=18.27 %

* 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 Company had a gross margin of 18.27% for the quarter that ended in Oct. 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.

Layne Christensen Company Annual Data

Jan04Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13
Gross_Profit 7693118186230252205238252200

Layne Christensen Company Quarterly Data

Jul11Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13
Gross_Profit 61635453585732374040
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