Switch to:
China Information Technology Inc (NAS:CNIT)
Gross Margin
40.59% (As of Dec. 2015)

Gross Margin is calculated as gross profit divided by its revenue. China Information Technology Inc's gross profit for the six months ended in Dec. 2015 was $-2.34 Mil. China Information Technology Inc's revenue for the six months ended in Dec. 2015 was $-5.77 Mil. Therefore, China Information Technology Inc's Gross Margin for the quarter that ended in Dec. 2015 was 40.59%.

Warning Sign:

China Information Technology Inc gross margin has been in long term decline. The average rate of decline per year is -3.3%.

CNIT' s Gross Margin Range Over the Past 10 Years
Min: 22.69   Max: 95.86
Current: 37.95

22.69
95.86

During the past 11 years, the highest Gross Margin of China Information Technology Inc was 95.86%. The lowest was 22.69%. And the median was 40.89%.

CNIT's Gross Margin is ranked lower than
63% of the 1809 Companies
in the Global Information Technology Services industry.

( Industry Median: 52.26 vs. CNIT: 37.95 )

China Information Technology Inc had a gross margin of 40.59% for the quarter that ended in Dec. 2015 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for China Information Technology Inc was -3.30% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

China Information Technology Inc's Gross Margin for the fiscal year that ended in Dec. 2015 is calculated as

Gross Margin (A: Dec. 2015 )=Gross Profit (A: Dec. 2015 ) / Revenue (A: Dec. 2015 )
=3.9 / 10.285
=(Revenue - Cost of Goods Sold) / Revenue
=(10.285 - 6.381) / 10.285
=37.96 %

China Information Technology Inc's Gross Margin for the quarter that ended in Dec. 2015 is calculated as

Gross Margin (Q: Dec. 2015 )=Gross Profit (Q: Dec. 2015 ) / Revenue (Q: Dec. 2015 )
=-2.3 / -5.768
=(Revenue - Cost of Goods Sold) / Revenue
=(-5.768 - -3.427) / -5.768
=40.59 %

* 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

China Information Technology Inc had a gross margin of 40.59% for the quarter that ended in Dec. 2015 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

China Information Technology Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross Margin 95.8658.1045.8150.1543.0738.7023.7322.6932.9737.96

China Information Technology Inc Semi-Annual Data

Jun11Dec11Jun12Dec12Jun13Dec13Jun14Dec14Jun15Dec15
Gross Margin 46.6431.3929.2820.8420.6210.2939.29-14.9138.9040.59
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK