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China Information Technology Inc (NAS:CNIT)
Gross Profit
$17.28 Mil (TTM As of Jun. 2014)

China Information Technology Inc's gross profit for the six months ended in Jun. 2014 was $11.78 Mil. China Information Technology Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $17.28 Mil.

Gross Margin is calculated as gross profit divided by its revenue. China Information Technology Inc's gross profit for the six months ended in Jun. 2014 was $11.78 Mil. China Information Technology Inc's revenue for the six months ended in Jun. 2014 was $29.98 Mil. Therefore, China Information Technology Inc's Gross Margin for the quarter that ended in Jun. 2014 was 39.29%.

China Information Technology Inc had a gross margin of 39.29% for the quarter that ended in Jun. 2014 => Competition eroding margins

During the past 9 years, the highest Gross Margin of China Information Technology Inc was 100.00%. The lowest was 22.69%. And the median was 45.81%.

Warning Sign:

China Information Technology Inc gross margin has been in long term decline. The average rate of decline per year is -15.4%.


Definition

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

China Information Technology Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=76.145 - 58.87
=17.28

China Information Technology Inc's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=29.976 - 18.197
=11.78

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. China Information Technology Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was $17.28 Mil.

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

China Information Technology Inc's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=11.78 / 29.976
=39.29 %

* 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

China Information Technology Inc had a gross margin of 39.29% for the quarter that ended in Jun. 2014 => 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.

China Information Technology Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 0.000.092.0917.6339.0850.6570.5644.3220.5017.28

China Information Technology Inc Semi-Annual Data

Dec10Mar11Jun11Sep11Dec11Jun12Dec12Jun13Dec13Jun14
Gross_Profit 21.5613.6611.929.499.268.660.007.699.5911.78
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