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McCormick & Company Inc (NYSE:MKC)
Gross Profit
$1,720 Mil (TTM As of May. 2015)

McCormick & Company Inc's gross profit for the three months ended in May. 2015 was $404 Mil. McCormick & Company Inc's gross profit for the trailing twelve months (TTM) ended in May. 2015 was $1,720 Mil.

Gross Margin is calculated as gross profit divided by its revenue. McCormick & Company Inc's gross profit for the three months ended in May. 2015 was $404 Mil. McCormick & Company Inc's revenue for the three months ended in May. 2015 was $1,024 Mil. Therefore, McCormick & Company Inc's Gross Margin for the quarter that ended in May. 2015 was 39.45%.

McCormick & Company Inc had a gross margin of 39.45% for the quarter that ended in May. 2015 => Competition eroding margins

During the past 13 years, the highest Gross Margin of McCormick & Company Inc was 42.49%. The lowest was 34.84%. And the median was 39.95%.


Definition

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

McCormick & Company Inc's Gross Profit for the fiscal year that ended in Nov. 2014 is calculated as

Gross Profit (A: Nov. 2014 )=Revenue - Cost of Goods Sold
=4243.2 - 2513
=1,730

McCormick & Company Inc's Gross Profit for the quarter that ended in May. 2015 is calculated as

Gross Profit (Q: May. 2015 )=Revenue - Cost of Goods Sold
=1024.1 - 620.1
=404

McCormick & Company Inc Gross Profit for the trailing twelve months (TTM) ended in May. 2015 was 420.1 (Aug. 2014 ) + 506.1 (Nov. 2014 ) + 389.7 (Feb. 2015 ) + 404 (May. 2015 ) = $1,720 Mil.

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

McCormick & Company Inc's Gross Margin for the quarter that ended in May. 2015 is calculated as

Gross Margin (Q: May. 2015 )=Gross Profit (Q: May. 2015 ) / Revenue (Q: May. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=404 / 1024.1
=39.45 %

* 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

McCormick & Company Inc had a gross margin of 39.45% for the quarter that ended in May. 2015 => 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.

McCormick & Company Inc Annual Data

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
Gross_Profit 1,0371,1151,1921,2881,3271,4181,5231,6181,6661,730

McCormick & Company Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
Gross_Profit 362394408502392413420506390404
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