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K12 Inc (NYSE:LRN)
Gross Profit
$350.3 Mil (TTM As of Jun. 2014)

K12 Inc's gross profit for the three months ended in Jun. 2014 was $90.0 Mil. K12 Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $350.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. K12 Inc's gross profit for the three months ended in Jun. 2014 was $90.0 Mil. K12 Inc's revenue for the three months ended in Jun. 2014 was $232.0 Mil. Therefore, K12 Inc's Gross Margin for the quarter that ended in Jun. 2014 was 38.78%.

K12 Inc had a gross margin of 38.78% for the quarter that ended in Jun. 2014 => Competition eroding margins

During the past 10 years, the highest Gross Margin of K12 Inc was 45.88%. The lowest was 37.58%. And the median was 41.97%.


Definition

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

K12 Inc's Gross Profit for the fiscal year that ended in Jun. 2014 is calculated as

Gross Profit (A: Jun. 2014 )=Revenue - Cost of Goods Sold
=919.553 - 569.219
=350.3

K12 Inc's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=232.046 - 142.054
=90.0

K12 Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 95.464 (Sep. 2013 ) + 70.247 (Dec. 2013 ) + 94.63 (Mar. 2014 ) + 89.992 (Jun. 2014 ) = $350.3 Mil.

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

K12 Inc's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=90.0 / 232.046
=38.78 %

* 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

K12 Inc had a gross margin of 38.78% for the quarter that ended in Jun. 2014 => 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.

K12 Inc Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Gross_Profit 0.052.164.595.0118.6162.4215.3299.8349.8350.3

K12 Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 72.267.8102.483.290.373.995.570.294.690.0
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