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Home Inns & Hotels Management Inc (NAS:HMIN)
Gross Profit
$175.2 Mil (TTM As of Sep. 2014)

Home Inns & Hotels Management Inc's gross profit for the three months ended in Sep. 2014 was $64.7 Mil. Home Inns & Hotels Management Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $175.2 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Home Inns & Hotels Management Inc's gross profit for the three months ended in Sep. 2014 was $64.7 Mil. Home Inns & Hotels Management Inc's revenue for the three months ended in Sep. 2014 was $287.5 Mil. Therefore, Home Inns & Hotels Management Inc's Gross Margin for the quarter that ended in Sep. 2014 was 22.51%.

Home Inns & Hotels Management Inc had a gross margin of 22.51% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 12 years, the highest Gross Margin of Home Inns & Hotels Management Inc was 51.98%. The lowest was 11.99%. And the median was 21.14%.

Warning Sign:

Home Inns & Hotels Management Inc gross margin has been in long term decline. The average rate of decline per year is -1.8%.


Definition

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

Home Inns & Hotels Management Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=981.42081001 - 801.27609483
=180.1

Home Inns & Hotels Management 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
=287.452673422 - 222.745918999
=64.7

Home Inns & Hotels Management Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 38.4142245637 (Dec. 2013 ) + 20.7255791349 (Mar. 2014 ) + 51.3568516676 (Jun. 2014 ) + 64.7067544231 (Sep. 2014 ) = $175.2 Mil.

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

Home Inns & Hotels Management 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
=64.7 / 287.452673422
=22.51 %

* 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

Home Inns & Hotels Management Inc had a gross margin of 22.51% 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.

Home Inns & Hotels Management Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 5.716.519.330.638.266.3120.5106.8104.2180.1

Home Inns & Hotels Management Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 32.338.422.815.244.555.038.420.751.464.7
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