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GuruFocus has detected 6 Warning Signs with China Yuchai International Ltd \$CYD.
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China Yuchai International Ltd (NYSE:CYD)
Gross Profit
\$403 Mil (TTM As of Sep. 2016)

China Yuchai International Ltd's gross profit for the three months ended in Sep. 2016 was \$95 Mil. China Yuchai International Ltd's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was \$403 Mil.

Gross Margin is calculated as gross profit divided by its revenue. China Yuchai International Ltd's gross profit for the three months ended in Sep. 2016 was \$95 Mil. China Yuchai International Ltd's revenue for the three months ended in Sep. 2016 was \$433 Mil. Therefore, China Yuchai International Ltd's Gross Margin for the quarter that ended in Sep. 2016 was 21.86%.

China Yuchai International Ltd had a gross margin of 21.86% for the quarter that ended in Sep. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of China Yuchai International Ltd was 24.73%. The lowest was 18.38%. And the median was 20.34%.

Warning Sign:

China Yuchai International Ltd gross margin has been in long term decline. The average rate of decline per year is -3.8%.

Definition

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

China Yuchai International Ltd'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 = 2129.51217999 - 1696.80498054 = 433

China Yuchai International Ltd's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

 Gross Profit (Q: Sep. 2016 ) = Revenue - Cost of Goods Sold = 432.638001859 - 338.075919763 = 95

China Yuchai International Ltd Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 107.323502504 (Dec. 2015 ) + 92.9333968967 (Mar. 2016 ) + 107.815668063 (Jun. 2016 ) + 94.5620820965 (Sep. 2016 ) = \$403 Mil.

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

China Yuchai International Ltd'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 = 95 / 432.638001859 = 21.86 %

* 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

China Yuchai International Ltd had a gross margin of 21.86% for the quarter that ended in Sep. 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.

China Yuchai International Ltd Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 282 299 373 603 542 462 538 532 433 428

China Yuchai International Ltd Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 117 157 108 135 92 107 93 108 95 147
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