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M D C Holdings Inc (NYSE:MDC)
Gross Profit
$245 Mil (TTM As of Sep. 2014)

M D C Holdings Inc's gross profit for the three months ended in Sep. 2014 was $73 Mil. M D C Holdings Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $245 Mil.

Gross Margin is calculated as gross profit divided by its revenue. M D C Holdings Inc's gross profit for the three months ended in Sep. 2014 was $73 Mil. M D C Holdings Inc's revenue for the three months ended in Sep. 2014 was $418 Mil. Therefore, M D C Holdings Inc's Gross Margin for the quarter that ended in Sep. 2014 was 17.38%.

M D C Holdings Inc had a gross margin of 17.38% for the quarter that ended in Sep. 2014 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of M D C Holdings Inc was 100.00%. The lowest was 6.53%. And the median was 15.21%.


Definition

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

M D C Holdings Inc'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
=1629.175 - 1339.858
=289

M D C Holdings Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=418.403 - 345.665
=73

M D C Holdings Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 39.757 (Dec. 2013 ) + 59.056 (Mar. 2014 ) + 73.714 (Jun. 2014 ) + 72.738 (Sep. 2014 ) = $245 Mil.

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

M D C Holdings Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=73 / 418.403
=17.38 %

* 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

M D C Holdings Inc had a gross margin of 17.38% for the quarter that ended in Sep. 2014 => 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.

M D C Holdings Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 7389291,149493219186208147177289

M D C Holdings Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 36506558879340597473
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