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Tel Instrument Electronics Corp (AMEX:TIK)
Gross Profit
$5.89 Mil (TTM As of Sep. 2014)

Tel Instrument Electronics Corp's gross profit for the three months ended in Sep. 2014 was $0.87 Mil. Tel Instrument Electronics Corp's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $5.89 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Tel Instrument Electronics Corp's gross profit for the three months ended in Sep. 2014 was $0.87 Mil. Tel Instrument Electronics Corp's revenue for the three months ended in Sep. 2014 was $3.59 Mil. Therefore, Tel Instrument Electronics Corp's Gross Margin for the quarter that ended in Sep. 2014 was 24.25%.

Tel Instrument Electronics Corp had a gross margin of 24.25% for the quarter that ended in Sep. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Tel Instrument Electronics Corp was 60.62%. The lowest was 12.28%. And the median was 51.62%.

Warning Sign:

Tel Instrument Electronics Corp gross margin has been in long term decline. The average rate of decline per year is -13.5%.


Definition

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

Tel Instrument Electronics Corp's Gross Profit for the fiscal year that ended in Mar. 2014 is calculated as

Gross Profit (A: Mar. 2014 )=Revenue - Cost of Goods Sold
=15.828 - 9.464
=6.36

Tel Instrument Electronics Corp's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=3.588 - 2.718
=0.87

Tel Instrument Electronics Corp Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 1.396 (Dec. 2013 ) + 2.506 (Mar. 2014 ) + 1.12 (Jun. 2014 ) + 0.869 (Sep. 2014 ) = $5.89 Mil.

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

Tel Instrument Electronics Corp's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=0.87 / 3.588
=24.25 %

* 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

Tel Instrument Electronics Corp had a gross margin of 24.25% for the quarter that ended in Sep. 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.

Tel Instrument Electronics Corp Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Gross_Profit 5.485.473.984.806.354.266.326.440.966.36

Tel Instrument Electronics Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 0.280.600.45-0.381.191.281.402.511.120.87
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