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McCormick & Company Inc (NYSE:MKC)
Gross Profit
$1,726 Mil (TTM As of Aug. 2014)

McCormick & Company Inc's gross profit for the three months ended in Aug. 2014 was $420 Mil. McCormick & Company Inc's gross profit for the trailing twelve months (TTM) ended in Aug. 2014 was $1,726 Mil.

Gross Margin is calculated as gross profit divided by its revenue. McCormick & Company Inc's gross profit for the three months ended in Aug. 2014 was $420 Mil. McCormick & Company Inc's revenue for the three months ended in Aug. 2014 was $1,043 Mil. Therefore, McCormick & Company Inc's Gross Margin for the quarter that ended in Aug. 2014 was 40.29%.

McCormick & Company Inc had a gross margin of 40.29% for the quarter that ended in Aug. 2014 => Durable competitive advantage

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 39.90%.


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. 2013 is calculated as

Gross Profit (A: Nov. 2013 )=Revenue - Cost of Goods Sold
=4123.4 - 2457.6
=1,666

McCormick & Company Inc's Gross Profit for the quarter that ended in Aug. 2014 is calculated as

Gross Profit (Q: Aug. 2014 )=Revenue - Cost of Goods Sold
=1042.8 - 622.7
=420

McCormick & Company Inc Gross Profit for the trailing twelve months (TTM) ended in Aug. 2014 was 502.2 (Nov. 2013 ) + 391.5 (Feb. 2014 ) + 412.5 (May. 2014 ) + 420.1 (Aug. 2014 ) = $1,726 Mil.

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

McCormick & Company Inc's Gross Margin for the quarter that ended in Aug. 2014 is calculated as

Gross Margin (Q: Aug. 2014 )=Gross Profit (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=420 / 1042.8
=40.29 %

* 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 40.29% for the quarter that ended in Aug. 2014 => Durable 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.

McCormick & Company Inc Annual Data

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
Gross_Profit 1,0081,0371,1151,1921,2881,3271,4181,5231,6181,666

McCormick & Company Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Gross_Profit 388392482362394408502392413420
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