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GuruFocus has detected 5 Warning Signs with CSP Inc \$CSPI.
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CSP Inc (NAS:CSPI)
Gross Profit
\$24.30 Mil (TTM As of Dec. 2016)

CSP Inc's gross profit for the three months ended in Dec. 2016 was \$4.45 Mil. CSP Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$24.30 Mil.

Gross Margin is calculated as gross profit divided by its revenue. CSP Inc's gross profit for the three months ended in Dec. 2016 was \$4.45 Mil. CSP Inc's revenue for the three months ended in Dec. 2016 was \$19.92 Mil. Therefore, CSP Inc's Gross Margin for the quarter that ended in Dec. 2016 was 22.35%.

CSP Inc had a gross margin of 22.35% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of CSP Inc was 24.84%. The lowest was 17.94%. And the median was 21.86%.

Definition

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

CSP Inc's Gross Profit for the fiscal year that ended in Sep. 2016 is calculated as

 Gross Profit (A: Sep. 2016 ) = Revenue - Cost of Goods Sold = 103.367 - 78.326 = 25.04

CSP Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 19.916 - 15.464 = 4.45

CSP Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 6.333 (Mar. 2016 ) + 7.205 (Jun. 2016 ) + 6.313 (Sep. 2016 ) + 4.452 (Dec. 2016 ) = \$24.30 Mil.

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

CSP Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

 Gross Margin (Q: Dec. 2016 ) = Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 4.45 / 19.916 = 22.35 %

* 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

CSP Inc had a gross margin of 22.35% for the quarter that ended in Dec. 2016 => Competition eroding margins

Related Terms

Historical Data

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

CSP Inc Annual Data

 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Gross_Profit 23.36 14.00 14.95 17.19 16.37 20.42 18.58 20.82 19.19 25.04

CSP Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 5.10 3.96 4.04 5.27 5.92 5.19 6.33 7.21 6.31 4.45
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