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Plains Exploration & Production Company (NYSE:PXP)
Gross Profit
$2,528 Mil (TTM As of Mar. 2013)

Plains Exploration & Production Company's gross profit for the three months ended in Mar. 2013 was $985 Mil. Plains Exploration & Production Company's gross profit for the trailing twelve months (TTM) ended in Mar. 2013 was $2,528 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Plains Exploration & Production Company's gross profit for the three months ended in Mar. 2013 was $985 Mil. Plains Exploration & Production Company's revenue for the three months ended in Mar. 2013 was $1,232 Mil. Therefore, Plains Exploration & Production Company's Gross Margin for the quarter that ended in Mar. 2013 was 79.94%.

Plains Exploration & Production Company had a gross margin of 79.94% for the quarter that ended in Mar. 2013 => Durable competitive advantage


Definition

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

Plains Exploration & Production Company'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
=2565.307 - 632.452
=1,933

Plains Exploration & Production Company's Gross Profit for the quarter that ended in Mar. 2013 is calculated as

Gross Profit (Q: Mar. 2013 )=Revenue - Cost of Goods Sold
=1232.115 - 247.143
=985

Plains Exploration & Production Company Gross Profit for the trailing twelve months (TTM) ended in Mar. 2013 was 420.46 (Jun. 2012 ) + 444.707 (Sep. 2012 ) + 677.82 (Dec. 2012 ) + 984.972 (Mar. 2013 ) = $2,528 Mil.

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

Plains Exploration & Production Company's Gross Margin for the quarter that ended in Mar. 2013 is calculated as

Gross Margin (Q: Mar. 2013 )=Gross Profit (Q: Mar. 2013 ) / Revenue (Q: Mar. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=985 / 1232.115
=79.94 %

* 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

Plains Exploration & Production Company had a gross margin of 79.94% for the quarter that ended in Mar. 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.

Plains Exploration & Production Company Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 1994496597308921,7777631,0931,4681,933

Plains Exploration & Production Company Quarterly Data

Dec10Mar11Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13
Gross_Profit 286308372384374390420445678985
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