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Richardson Electronics (NAS:RELL)
Gross Profit
$41.5 Mil (TTM As of Aug. 2014)

Richardson Electronics's gross profit for the three months ended in Aug. 2014 was $10.7 Mil. Richardson Electronics's gross profit for the trailing twelve months (TTM) ended in Aug. 2014 was $41.5 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Richardson Electronics's gross profit for the three months ended in Aug. 2014 was $10.7 Mil. Richardson Electronics's revenue for the three months ended in Aug. 2014 was $34.7 Mil. Therefore, Richardson Electronics's Gross Margin for the quarter that ended in Aug. 2014 was 30.72%.

Richardson Electronics had a gross margin of 30.72% for the quarter that ended in Aug. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Richardson Electronics was 30.75%. The lowest was 21.23%. And the median was 26.98%.


Definition

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

Richardson Electronics's Gross Profit for the fiscal year that ended in May. 2014 is calculated as

Gross Profit (A: May. 2014 )=Revenue - Cost of Goods Sold
=137.96 - 96.946
=41.0

Richardson Electronics's Gross Profit for the quarter that ended in Aug. 2014 is calculated as

Gross Profit (Q: Aug. 2014 )=Revenue - Cost of Goods Sold
=34.699 - 24.041
=10.7

Richardson Electronics Gross Profit for the trailing twelve months (TTM) ended in Aug. 2014 was 11.007 (Nov. 2013 ) + 9.651 (Feb. 2014 ) + 10.164 (May. 2014 ) + 10.658 (Aug. 2014 ) = $41.5 Mil.

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

Richardson Electronics's Gross Margin for the quarter that ended in Aug. 2014 is calculated as

Gross Margin (Q: Aug. 2014 )=Gross Profit (Q: Aug. 2014 ) / Revenue (Q: Aug. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=10.7 / 34.699
=30.72 %

* 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

Richardson Electronics had a gross margin of 30.72% for the quarter that ended in Aug. 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.

Richardson Electronics Annual Data

May05May06May07May08May09May10May11May12May13May14
Gross_Profit 136.9155.8132.4135.6109.6118.046.146.841.541.0

Richardson Electronics Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
Gross_Profit 11.110.610.79.910.210.211.09.710.210.7
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