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Li & Fung Ltd (OTCPK:LFUGF)
Gross Profit
$2,159 Mil (TTM As of Jun. 2016)

Li & Fung Ltd's gross profit for the six months ended in Jun. 2016 was $921 Mil. Li & Fung Ltd's gross profit for the trailing twelve months (TTM) ended in Jun. 2016 was $2,159 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Li & Fung Ltd's gross profit for the six months ended in Jun. 2016 was $921 Mil. Li & Fung Ltd's revenue for the six months ended in Jun. 2016 was $8,071 Mil. Therefore, Li & Fung Ltd's Gross Margin for the quarter that ended in Jun. 2016 was 11.41%.

Li & Fung Ltd had a gross margin of 11.41% for the quarter that ended in Jun. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Li & Fung Ltd was 14.91%. The lowest was 10.48%. And the median was 11.52%.

Warning Sign:

Li & Fung Ltd gross margin has been in long term decline. The average rate of decline per year is -5.2%.


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. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=18830.835 - 16671.655
=2,159

Li & Fung Ltd's Gross Profit for the quarter that ended in Jun. 2016 is calculated as

Gross Profit (Q: Jun. 2016 )=Revenue - Cost of Goods Sold
=8070.733 - 7150.033
=921

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 Jun. 2016 was $2,159 Mil.

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

Li & Fung Ltd's Gross Margin for the quarter that ended in Jun. 2016 is calculated as

Gross Margin (Q: Jun. 2016 )=Gross Profit (Q: Jun. 2016 ) / Revenue (Q: Jun. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=921 / 8070.733
=11.41 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 11.41% for the quarter that ended in Jun. 2016 => 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 local exchange's currency.

Li & Fung Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 9431,2531,4971,5572,1662,9862,8682,2192,1822,159

Li & Fung Ltd Semi-Annual Data

Dec11Jun12Dec12Jun13Dec13Jun14Dec14Jun15Dec15Jun16
Gross_Profit 1,7691,2811,5879551,2649681,2149611,198921
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