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Nexen, Inc. (NYSE:NXY)
Gross Profit
$4,788 Mil (TTM As of Dec. 2012)

Nexen, Inc.'s gross profit for the three months ended in Dec. 2012 was $124 Mil. Nexen, Inc.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2012 was $4,788 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Nexen, Inc.'s gross profit for the three months ended in Dec. 2012 was $124 Mil. Nexen, Inc.'s revenue for the three months ended in Dec. 2012 was $1,713 Mil. Therefore, Nexen, Inc.'s Gross Margin for the quarter that ended in Dec. 2012 was 100.00%.

Nexen, Inc. had a gross margin of 100.00% for the quarter that ended in Dec. 2012 => Durable competitive advantage


Definition

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

Nexen, Inc.'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
=6778.78787879 - 0
=6,779

Nexen, Inc.'s Gross Profit for the quarter that ended in Dec. 2012 is calculated as

Gross Profit (Q: Dec. 2012 )=Revenue - Cost of Goods Sold
=1713.13131313 - 0
=1,713

Nexen, Inc. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2012 was 1615.69416499 (Mar. 2012 ) + 1636.18677043 (Jun. 2012 ) + 1412.06543967 (Sep. 2012 ) + 124.242424242 (Dec. 2012 ) = $4,788 Mil.

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

Nexen, Inc.'s Gross Margin for the quarter that ended in Dec. 2012 is calculated as

Gross Margin (Q: Dec. 2012 )=Gross Profit (Q: Dec. 2012 ) / Revenue (Q: Dec. 2012 )
=(Revenue - Cost of Goods Sold) / Revenue
=1,713 / 1713.13131313
=100.00 %

* 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

Nexen, Inc. had a gross margin of 100.00% for the quarter that ended in Dec. 2012 => 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.

Nexen, Inc. Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 1,6042,3763,1713,5285,1045,8914,7525,2185,8974,833

Nexen, Inc. Quarterly Data

Sep10Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12
Gross_Profit 1,3671,1321,6141,5251,4101,5211,6161,6361,412124
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