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Entropic Communications Inc (NAS:ENTR)
Gross Profit
\$93.3 Mil (TTM As of Dec. 2014)

Entropic Communications Inc's gross profit for the three months ended in Dec. 2014 was \$21.1 Mil. Entropic Communications Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was \$93.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Entropic Communications Inc's gross profit for the three months ended in Dec. 2014 was \$21.1 Mil. Entropic Communications Inc's revenue for the three months ended in Dec. 2014 was \$42.6 Mil. Therefore, Entropic Communications Inc's Gross Margin for the quarter that ended in Dec. 2014 was 49.50%.

Entropic Communications Inc had a gross margin of 49.50% for the quarter that ended in Dec. 2014 => Durable competitive advantage

Definition

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

Entropic Communications Inc's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

 Gross Profit (A: Dec. 2014 ) = Revenue - Cost of Goods Sold = 191.619 - 98.368 = 93.3

Entropic Communications Inc's Gross Profit for the quarter that ended in Dec. 2014 is calculated as

 Gross Profit (Q: Dec. 2014 ) = Revenue - Cost of Goods Sold = 42.586 - 21.504 = 21.1

Entropic Communications Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 26.062 (Mar. 2014 ) + 23.538 (Jun. 2014 ) + 22.569 (Sep. 2014 ) + 21.082 (Dec. 2014 ) = \$93.3 Mil.

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

Entropic Communications Inc's Gross Margin for the quarter that ended in Dec. 2014 is calculated as

 Gross Margin (Q: Dec. 2014 ) = Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 ) = (Revenue - Cost of Goods Sold) / Revenue = 21.1 / 42.586 = 49.50 %

* 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

Entropic Communications Inc had a gross margin of 49.50% for the quarter that ended in Dec. 2014 => Durable competitive advantage

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Entropic Communications Inc Annual Data

 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Gross_Profit 1.7 10.4 46.3 66.6 58.9 112.2 132.7 164.0 124.4 93.3

Entropic Communications Inc Quarterly Data

 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Gross_Profit 43.9 34.8 34.3 27.5 27.8 26.1 23.5 22.6 21.1 22.6
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