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II-VI, Inc. (NAS:IIVI)
Gross Profit
$211.6 Mil (TTM As of Dec. 2013)

II-VI, Inc.'s gross profit for the three months ended in Dec. 2013 was $53.4 Mil. II-VI, Inc.'s gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $211.6 Mil.

Gross Margin is calculated as gross profit divided by its revenue. II-VI, Inc.'s gross profit for the three months ended in Dec. 2013 was $53.4 Mil. II-VI, Inc.'s revenue for the three months ended in Dec. 2013 was $171.8 Mil. Therefore, II-VI, Inc.'s Gross Margin for the quarter that ended in Dec. 2013 was 31.09%.

II-VI, Inc. had a gross margin of 31.09% for the quarter that ended in Dec. 2013 => Competition eroding margins

During the past 13 years, the highest Gross Margin of II-VI, Inc. was 53.70%. The lowest was 35.38%. And the median was 42.30%.

Warning Sign:

II-VI, Inc. gross margin has been in long term decline. The average rate of decline per year is -3.3%.


Definition

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

II-VI, Inc.'s Gross Profit for the fiscal year that ended in Jun. 2013 is calculated as

Gross Profit (A: Jun. 2013 )=Revenue - Cost of Goods Sold
=558.396 - 360.83
=197.6

II-VI, Inc.'s Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=171.765 - 118.371
=53.4

II-VI, Inc. Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 51.001 (Mar. 2013 ) + 50.86 (Jun. 2013 ) + 56.346 (Sep. 2013 ) + 53.394 (Dec. 2013 ) = $211.6 Mil.

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

II-VI, Inc.'s Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=53.4 / 171.765
=31.09 %

* 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

II-VI, Inc. had a gross margin of 31.09% for the quarter that ended in Dec. 2013 => 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.

II-VI, Inc. Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 70.988.493.5119.4130.2123.6134.6206.9192.7197.6

II-VI, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 55.043.546.048.348.847.351.050.956.353.4
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