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Xyratex, Ltd. (NAS:XRTX)
Gross Profit
$171.1 Mil (TTM As of Nov. 2013)

Xyratex, Ltd.'s gross profit for the three months ended in Nov. 2013 was $41.1 Mil. Xyratex, Ltd.'s gross profit for the trailing twelve months (TTM) ended in Nov. 2013 was $171.1 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Xyratex, Ltd.'s gross profit for the three months ended in Nov. 2013 was $41.1 Mil. Xyratex, Ltd.'s revenue for the three months ended in Nov. 2013 was $185.3 Mil. Therefore, Xyratex, Ltd.'s Gross Margin for the quarter that ended in Nov. 2013 was 22.19%.

Xyratex, Ltd. had a gross margin of 22.19% for the quarter that ended in Nov. 2013 => Competition eroding margins


Definition

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

Xyratex, Ltd.'s Gross Profit for the fiscal year that ended in Nov. 2013 is calculated as

Gross Profit (A: Nov. 2013 )=Revenue - Cost of Goods Sold
=814.318 - 643.237
=171.1

Xyratex, Ltd.'s Gross Profit for the quarter that ended in Nov. 2013 is calculated as

Gross Profit (Q: Nov. 2013 )=Revenue - Cost of Goods Sold
=185.254 - 144.139
=41.1

Xyratex, Ltd. Gross Profit for the trailing twelve months (TTM) ended in Nov. 2013 was 36.934 (Feb. 2013 ) + 47.533 (May. 2013 ) + 45.499 (Aug. 2013 ) + 41.115 (Nov. 2013 ) = $171.1 Mil.

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

Xyratex, Ltd.'s Gross Margin for the quarter that ended in Nov. 2013 is calculated as

Gross Margin (Q: Nov. 2013 )=Gross Profit (Q: Nov. 2013 ) / Revenue (Q: Nov. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=41.1 / 185.254
=22.19 %

* 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

Xyratex, Ltd. had a gross margin of 22.19% for the quarter that ended in Nov. 2013 => 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.

Xyratex, Ltd. Annual Data

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
Gross_Profit 94.6144.3197.3169.1158.6125.3279.8222.1195.8171.1

Xyratex, Ltd. Quarterly Data

Aug11Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13
Gross_Profit 60.468.653.053.351.038.536.947.545.541.1
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