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Li & Fung Ltd (OTCPK:LFUGF)
Gross Profit
$3,214 Mil (TTM As of Dec. 2013)

Li & Fung Ltd's gross profit for the six months ended in Dec. 2013 was $1,870 Mil. Li & Fung Ltd's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $3,214 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Li & Fung Ltd's gross profit for the six months ended in Dec. 2013 was $1,870 Mil. Li & Fung Ltd's revenue for the six months ended in Dec. 2013 was $11,617 Mil. Therefore, Li & Fung Ltd's Gross Margin for the quarter that ended in Dec. 2013 was 16.10%.

Li & Fung Ltd had a gross margin of 16.10% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Li & Fung Ltd was 15.49%. The lowest was 8.81%. And the median was 10.49%.


Definition

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

Li & Fung Ltd'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
=20745.41 - 17530.953
=3,214

Li & Fung Ltd's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=11616.663 - 9746.761
=1,870

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. Li & Fung Ltd Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was $3,214 Mil.

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

Li & Fung Ltd'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
=1,870 / 11616.663
=16.10 %

* 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

Li & Fung Ltd had a gross margin of 16.10% for the quarter that ended in Dec. 2013 => No sustainable competitive advantage


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.

Li & Fung Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 5567309431,2531,4971,5572,1662,9862,8683,214

Li & Fung Ltd Semi-Annual Data

Jun09Dec09Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13
Gross_Profit 6698888621,3031,2171,7691,2811,5871,3451,870
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