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Westlake Chemical Corp (NYSE:WLK)
Gross Profit
$935 Mil (TTM As of Sep. 2016)

Westlake Chemical Corp's gross profit for the three months ended in Sep. 2016 was $202 Mil. Westlake Chemical Corp's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was $935 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Westlake Chemical Corp's gross profit for the three months ended in Sep. 2016 was $202 Mil. Westlake Chemical Corp's revenue for the three months ended in Sep. 2016 was $1,279 Mil. Therefore, Westlake Chemical Corp's Gross Margin for the quarter that ended in Sep. 2016 was 15.80%.

Westlake Chemical Corp had a gross margin of 15.80% for the quarter that ended in Sep. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Westlake Chemical Corp was 29.84%. The lowest was 1.88%. And the median was 15.70%.


Definition

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

Westlake Chemical Corp's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=4463.336 - 3278.145
=1,185

Westlake Chemical Corp's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

Gross Profit (Q: Sep. 2016 )=Revenue - Cost of Goods Sold
=1279.028 - 1076.895
=202

Westlake Chemical Corp Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 236.188 (Dec. 2015 ) + 255.585 (Mar. 2016 ) + 241.366 (Jun. 2016 ) + 202.133 (Sep. 2016 ) = $935 Mil.

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

Westlake Chemical Corp's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin (Q: Sep. 2016 )=Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=202 / 1279.028
=15.80 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

Westlake Chemical Corp had a gross margin of 15.80% for the quarter that ended in Sep. 2016 => 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 local exchange's currency.

Westlake Chemical Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 396271691954835597371,1011,3171,185

Westlake Chemical Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross_Profit 306362363285353311236256241202
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