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GuruFocus has detected 3 Warning Signs with Red Hat Inc \$RHT.
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Red Hat Inc (NYSE:RHT)
COGS-to-Revenue
0.15 (As of Feb. 2017)

Red Hat Inc's cost of goods sold for the three months ended in Feb. 2017 was \$92 Mil. Its revenue for the three months ended in Feb. 2017 was \$629 Mil.

Red Hat Inc's COGS to Revenue for the three months ended in Feb. 2017 was 0.15.

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin. Red Hat Inc's Gross Margin for the three months ended in Feb. 2017 was 85.34%.

Definition

Red Hat Inc's COGS to Revenue for the fiscal year that ended in Feb. 2017 is calculated as

 COGS to Revenue = Cost of Goods Sold / Revenue = 354.378 / 2411.803 = 0.15

Red Hat Inc's COGS to Revenue for the quarter that ended in Feb. 2017 is calculated as

 COGS to Revenue = Cost of Goods Sold / Revenue = 92.207 / 628.84 = 0.15

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

Explanation

Cost of Goods Sold is directly linked to profitability of the company through Gross Margin.

Red Hat Inc's Gross Margin for the three months ended in Feb. 2017 is calculated as:

 Gross Margin = 1 - COGS to Revenue = 1 - Cost of Goods Sold / Revenue = 1 - 92.207 / 628.84 = 85.34 %

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

A company that has a moat can usually maintain or even expand their Gross Margin. A company can increase its Gross Margin in two ways. It can increase the prices of the goods it sells and keeps its Cost of Goods Sold unchanged. Or it can keep the sales price unchanged and squeeze its suppliers to reduce the Cost of Goods Sold. Warren Buffett believes businesses with the power to raise prices have moats.

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.

Red Hat Inc Annual Data

 Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17 cogs2rev 0.15 0.16 0.15 0.17 0.16 0.15 0.15 0.15 0.15 0.15

Red Hat Inc Quarterly Data

 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 cogs2rev 0.16 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
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