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Gross Profit
\$1,156 Mil (TTM As of Mar. 2015)

MeadWestvaco Corp's gross profit for the three months ended in Mar. 2015 was \$237 Mil. MeadWestvaco Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was \$1,156 Mil.

Gross Margin is calculated as gross profit divided by its revenue. MeadWestvaco Corp's gross profit for the three months ended in Mar. 2015 was \$237 Mil. MeadWestvaco Corp's revenue for the three months ended in Mar. 2015 was \$1,282 Mil. Therefore, MeadWestvaco Corp's Gross Margin for the quarter that ended in Mar. 2015 was 18.49%.

MeadWestvaco Corp had a gross margin of 18.49% for the quarter that ended in Mar. 2015 => No sustainable competitive advantage

Definition

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

MeadWestvaco Corp's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

 Gross Profit (A: Dec. 2014 ) = Revenue - Cost of Goods Sold = 5631 - 4465 = 1,166

MeadWestvaco Corp's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

 Gross Profit (Q: Mar. 2015 ) = Revenue - Cost of Goods Sold = 1282 - 1045 = 237

MeadWestvaco Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 318 (Jun. 2014 ) + 333 (Sep. 2014 ) + 268 (Dec. 2014 ) + 237 (Mar. 2015 ) = \$1,156 Mil.

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

MeadWestvaco Corp's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

 Gross Margin (Q: Mar. 2015 ) = Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 ) = (Revenue - Cost of Goods Sold) / Revenue = 237 / 1282 = 18.49 %

* 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

MeadWestvaco Corp had a gross margin of 18.49% for the quarter that ended in Mar. 2015 => No sustainable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.