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GuruFocus has detected 8 Warning Signs with Resource America Inc \$REXI.
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Resource America Inc (NAS:REXI)
Gross Profit
\$-3.0 Mil (TTM As of Jun. 2016)

Resource America Inc's gross profit for the three months ended in Jun. 2016 was \$6.7 Mil. Resource America Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 2016 was \$-3.0 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Resource America Inc's gross profit for the three months ended in Jun. 2016 was \$6.7 Mil. Resource America Inc's revenue for the three months ended in Jun. 2016 was \$26.1 Mil. Therefore, Resource America Inc's Gross Margin for the quarter that ended in Jun. 2016 was 25.52%.

Resource America Inc had a gross margin of 25.52% for the quarter that ended in Jun. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Resource America Inc was 71.23%. The lowest was -4.68%. And the median was 38.68%.

Warning Sign:

Resource America Inc gross margin has been in long term decline. The average rate of decline per year is -5%.

Definition

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

Resource America Inc'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 = 99.855 - 62.966 = 36.9

Resource America Inc's Gross Profit for the quarter that ended in Jun. 2016 is calculated as

 Gross Profit (Q: Jun. 2016 ) = Revenue - Cost of Goods Sold = 26.139 - 19.469 = 6.7

Resource America Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2016 was 25.651 (Sep. 2015 ) + -46.185 (Dec. 2015 ) + 10.878 (Mar. 2016 ) + 6.67 (Jun. 2016 ) = \$-3.0 Mil.

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

Resource America Inc'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 = 6.7 / 26.139 = 25.52 %

* 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

Resource America Inc had a gross margin of 25.52% for the quarter that ended in Jun. 2016 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Resource America Inc Annual Data

 Sep06 Sep07 Sep08 Sep09 Sep10 Sep11 Sep12 Dec13 Dec14 Dec15 Gross_Profit 37.3 72.8 62.9 39.8 28.8 106.7 121.7 25.8 30.5 36.9

Resource America Inc Quarterly Data

 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Gross_Profit 29.2 30.3 29.2 -58.2 8.7 11.5 25.7 -46.2 10.9 6.7
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