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Magellan Midstream Partners, L.P. (NYSE:MMP)
Gross Profit
$974 Mil (TTM As of Dec. 2013)

Magellan Midstream Partners, L.P.'s gross profit for the three months ended in Dec. 2013 was $295 Mil. Magellan Midstream Partners, L.P.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $974 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Magellan Midstream Partners, L.P.'s gross profit for the three months ended in Dec. 2013 was $295 Mil. Magellan Midstream Partners, L.P.'s revenue for the three months ended in Dec. 2013 was $577 Mil. Therefore, Magellan Midstream Partners, L.P.'s Gross Margin for the quarter that ended in Dec. 2013 was 51.13%.

Magellan Midstream Partners, L.P. had a gross margin of 51.13% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Magellan Midstream Partners, L.P. was 78.76%. The lowest was 28.55%. And the median was 42.20%.


Definition

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

Magellan Midstream Partners, L.P.'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
=1897.606 - 924.099
=974

Magellan Midstream Partners, L.P.'s Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=577.438 - 282.216
=295

Magellan Midstream Partners, L.P. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 206.842 (Mar. 2013 ) + 251.169 (Jun. 2013 ) + 220.274 (Sep. 2013 ) + 295.222 (Dec. 2013 ) = $974 Mil.

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

Magellan Midstream Partners, L.P.'s Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=295 / 577.438
=51.13 %

* 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

Magellan Midstream Partners, L.P. had a gross margin of 51.13% for the quarter that ended in Dec. 2013 => 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.

Magellan Midstream Partners, L.P. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 263325374433512476607736787974

Magellan Midstream Partners, L.P. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 187197176223137251207251220295
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