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II-VI Inc (NAS:IIVI)
Gross Profit
$215.3 Mil (TTM As of Mar. 2014)

II-VI Inc's gross profit for the three months ended in Mar. 2014 was $54.7 Mil. II-VI Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $215.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. II-VI Inc's gross profit for the three months ended in Mar. 2014 was $54.7 Mil. II-VI Inc's revenue for the three months ended in Mar. 2014 was $173.6 Mil. Therefore, II-VI Inc's Gross Margin for the quarter that ended in Mar. 2014 was 31.51%.

II-VI Inc had a gross margin of 31.51% for the quarter that ended in Mar. 2014 => 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 Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=173.555 - 118.865
=54.7

II-VI Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 50.86 (Jun. 2013 ) + 56.346 (Sep. 2013 ) + 53.394 (Dec. 2013 ) + 54.69 (Mar. 2014 ) = $215.3 Mil.

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

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

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=54.7 / 173.555
=31.51 %

* 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

II-VI Inc had a gross margin of 31.51% for the quarter that ended in Mar. 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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 70.988.493.5119.4130.2123.6134.6206.9192.7197.6

II-VI Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross_Profit 43.546.048.348.847.351.050.956.353.454.7
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