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II-VI Inc (NAS:IIVI)
Gross Profit
$238.3 Mil (TTM As of Sep. 2014)

II-VI Inc's gross profit for the three months ended in Sep. 2014 was $67.9 Mil. II-VI Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $238.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. II-VI Inc's gross profit for the three months ended in Sep. 2014 was $67.9 Mil. II-VI Inc's revenue for the three months ended in Sep. 2014 was $185.8 Mil. Therefore, II-VI Inc's Gross Margin for the quarter that ended in Sep. 2014 was 36.52%.

II-VI Inc had a gross margin of 36.52% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of II-VI Inc was 53.70%. The lowest was 33.18%. And the median was 41.89%.

Warning Sign:

II-VI Inc gross margin has been in long term decline. The average rate of decline per year is -4.2%.


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. 2014 is calculated as

Gross Profit (A: Jun. 2014 )=Revenue - Cost of Goods Sold
=683.261 - 456.545
=226.7

II-VI Inc's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=185.833 - 117.974
=67.9

II-VI Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 53.394 (Dec. 2013 ) + 54.69 (Mar. 2014 ) + 62.321 (Jun. 2014 ) + 67.859 (Sep. 2014 ) = $238.3 Mil.

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

II-VI Inc's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=67.9 / 185.833
=36.52 %

* 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 36.52% for the quarter that ended in Sep. 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.

II-VI Inc Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Gross_Profit 88.493.5119.4130.2123.6134.6206.9192.7203.5226.7

II-VI Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 48.348.847.351.054.956.353.454.762.367.9
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