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GuruFocus has detected 4 Warning Signs with China Petroleum & Chemical Corp $SNP.
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China Petroleum & Chemical Corp (NYSE:SNP)
Gross Profit
$82,541 Mil (TTM As of Dec. 2016)

China Petroleum & Chemical Corp's gross profit for the three months ended in Dec. 2016 was $22,431 Mil. China Petroleum & Chemical Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $82,541 Mil.

Gross Margin is calculated as gross profit divided by its revenue. China Petroleum & Chemical Corp's gross profit for the three months ended in Dec. 2016 was $22,431 Mil. China Petroleum & Chemical Corp's revenue for the three months ended in Dec. 2016 was $81,934 Mil. Therefore, China Petroleum & Chemical Corp's Gross Margin for the quarter that ended in Dec. 2016 was 27.38%.

China Petroleum & Chemical Corp had a gross margin of 27.38% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of China Petroleum & Chemical Corp was 28.55%. The lowest was 13.43%. And the median was 18.79%.


Definition

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

China Petroleum & Chemical Corp's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=279041.446285 - 199383.074655
=79,658

China Petroleum & Chemical Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=81933.8709211 - 59502.8758057
=22,431

China Petroleum & Chemical Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 19401.9407323 (Mar. 2016 ) + 20888.1199539 (Jun. 2016 ) + 19819.6455878 (Sep. 2016 ) + 22430.9951155 (Dec. 2016 ) = $82,541 Mil.

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

China Petroleum & Chemical Corp's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=22,431 / 81933.8709211
=27.38 %

* 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

China Petroleum & Chemical Corp had a gross margin of 27.38% for the quarter that ended in Dec. 2016 => 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 local exchange's currency.

China Petroleum & Chemical Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 30,27729,28751,84163,92875,30377,78983,71379,50781,61379,658

China Petroleum & Chemical Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 20,75717,49119,13024,30119,51420,45919,40220,88819,82022,431
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