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Valassis Communications Inc (NYSE:VCI)
Gross Profit
$531 Mil (TTM As of Sep. 2013)

Valassis Communications Inc's gross profit for the three months ended in Sep. 2013 was $128 Mil. Valassis Communications Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2013 was $531 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Valassis Communications Inc's gross profit for the three months ended in Sep. 2013 was $128 Mil. Valassis Communications Inc's revenue for the three months ended in Sep. 2013 was $489 Mil. Therefore, Valassis Communications Inc's Gross Margin for the quarter that ended in Sep. 2013 was 26.16%.

Valassis Communications Inc had a gross margin of 26.16% for the quarter that ended in Sep. 2013 => Competition eroding margins


Definition

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

Valassis Communications 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
=2162.084 - 1610.139
=552

Valassis Communications Inc's Gross Profit for the quarter that ended in Sep. 2013 is calculated as

Gross Profit (Q: Sep. 2013 )=Revenue - Cost of Goods Sold
=489.383 - 361.337
=128

Valassis Communications Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2013 was 150.205 (Dec. 2012 ) + 121.754 (Mar. 2013 ) + 131.344 (Jun. 2013 ) + 128.046 (Sep. 2013 ) = $531 Mil.

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

Valassis Communications Inc's Gross Margin for the quarter that ended in Sep. 2013 is calculated as

Gross Margin (Q: Sep. 2013 )=Gross Profit (Q: Sep. 2013 ) / Revenue (Q: Sep. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=128 / 489.383
=26.16 %

* 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

Valassis Communications Inc had a gross margin of 26.16% for the quarter that ended in Sep. 2013 => Competition eroding margins


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.

Valassis Communications Inc Annual Data

Dec03Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12
Gross_Profit 297296295254528526551609566552

Valassis Communications Inc Quarterly Data

Jun11Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13
Gross_Profit 147133147130137136150122131128
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