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MOD-PAC Corporation (NAS:MPAC)
Gross Profit
$12.24 Mil (TTM As of Jun. 2013)

MOD-PAC Corporation's gross profit for the three months ended in Jun. 2013 was $2.43 Mil. MOD-PAC Corporation's gross profit for the trailing twelve months (TTM) ended in Jun. 2013 was $12.24 Mil.

Gross Margin is calculated as gross profit divided by its revenue. MOD-PAC Corporation's gross profit for the three months ended in Jun. 2013 was $2.43 Mil. MOD-PAC Corporation's revenue for the three months ended in Jun. 2013 was $14.29 Mil. Therefore, MOD-PAC Corporation's Gross Margin for the quarter that ended in Jun. 2013 was 17.00%.

MOD-PAC Corporation had a gross margin of 17.00% for the quarter that ended in Jun. 2013 => No sustainable competitive advantage


Definition

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

MOD-PAC Corporation's Gross Profit for the fiscal year that ended in Dec. 2012 is calculated as

Gross Profit (A: Dec. 2012 )=Revenue - Cost of Goods Sold
=59.284 - 48.554
=10.73

MOD-PAC Corporation's Gross Profit for the quarter that ended in Jun. 2013 is calculated as

Gross Profit (Q: Jun. 2013 )=Revenue - Cost of Goods Sold
=14.294 - 11.864
=2.43

MOD-PAC Corporation Gross Profit for the trailing twelve months (TTM) ended in Jun. 2013 was 3.302 (Sep. 2012 ) + 3.867 (Dec. 2012 ) + 2.641 (Mar. 2013 ) + 2.43 (Jun. 2013 ) = $12.24 Mil.

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

MOD-PAC Corporation's Gross Margin for the quarter that ended in Jun. 2013 is calculated as

Gross Margin (Q: Jun. 2013 )=Gross Profit (Q: Jun. 2013 ) / Revenue (Q: Jun. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=2.43 / 14.294
=17.00 %

* 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

MOD-PAC Corporation had a gross margin of 17.00% for the quarter that ended in Jun. 2013 => 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.

MOD-PAC Corporation Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 9.7413.2728.234.324.476.727.388.7610.2810.73

MOD-PAC Corporation Quarterly Data

Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13
Gross_Profit 2.252.702.832.511.781.793.303.872.642.43
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