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Educational Development Corp (NAS:EDUC)
Gross Margin
55.74% (As of Aug. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Educational Development Corp's gross profit for the three months ended in Aug. 2014 was $3.80 Mil. Educational Development Corp's revenue for the three months ended in Aug. 2014 was $6.81 Mil. Therefore, Educational Development Corp's Gross Margin for the quarter that ended in Aug. 2014 was 55.74%.

Warning Sign:

Educational Development Corp gross margin has been in long term decline. The average rate of decline per year is -1.7%.

EDUC' s 10-Year Gross Margin Range
Min: 56   Max: 64.78
Current: 60.39

56
64.78

During the past 13 years, the highest Gross Margin of Educational Development Corp was 64.78%. The lowest was 56.00%. And the median was 62.02%.

EDUC's Gross Marginis ranked lower than
100% of the Companies
in the Global Publishing industry.

( Industry Median: vs. EDUC: 60.39 )

Educational Development Corp had a gross margin of 55.74% for the quarter that ended in Aug. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Educational Development Corp was -1.70% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Educational Development Corp's Gross Margin for the fiscal year that ended in Feb. 2014 is calculated as

Gross Margin (A: Feb. 2014 )=Gross Profit (A: Feb. 2014 ) / Revenue (A: Feb. 2014 )
=15.6 / 26.097
=(Revenue - Cost of Goods Sold) / Revenue
=(26.097 - 10.524) / 26.097
=59.67 %

Educational Development Corp's Gross Margin for the quarter that ended in Aug. 2014 is calculated as

Gross Margin (Q: Aug. 2014 )=Gross Profit (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 )
=3.8 / 6.808
=(Revenue - Cost of Goods Sold) / Revenue
=(6.808 - 3.013) / 6.808
=55.74 %

* 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

Educational Development Corp had a gross margin of 55.74% for the quarter that ended in Aug. 2014 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

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

Educational Development Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Gross Margin 64.1863.3564.1064.7864.0163.2562.2559.8558.8259.68

Educational Development Corp Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Gross Margin 62.4655.3461.2054.5858.6553.4461.2664.4960.3955.74
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