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GuruFocus has detected 3 Warning Signs with China Petroleum & Chemical Corp $SNP.
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China Petroleum & Chemical Corp (NYSE:SNP)
Gross Profit
$83,922 Mil (TTM As of Mar. 2017)

China Petroleum & Chemical Corp's gross profit for the three months ended in Mar. 2017 was $20,798 Mil. China Petroleum & Chemical Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was $83,922 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 Mar. 2017 was $20,798 Mil. China Petroleum & Chemical Corp's revenue for the three months ended in Mar. 2017 was $84,448 Mil. Therefore, China Petroleum & Chemical Corp's Gross Margin for the quarter that ended in Mar. 2017 was 24.63%.

China Petroleum & Chemical Corp had a gross margin of 24.63% for the quarter that ended in Mar. 2017 => 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 Mar. 2017 is calculated as

Gross Profit (Q: Mar. 2017 )=Revenue - Cost of Goods Sold
=84448.0707862 - 63650.5657093
=20,798

China Petroleum & Chemical Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 20873.7024221 (Jun. 2016 ) + 19819.6455878 (Sep. 2016 ) + 22430.9951155 (Dec. 2016 ) + 20797.5050769 (Mar. 2017 ) = $83,922 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 Mar. 2017 is calculated as

Gross Margin (Q: Mar. 2017 )=Gross Profit (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=20,798 / 84448.0707862
=24.63 %

* 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 24.63% for the quarter that ended in Mar. 2017 => 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

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Gross_Profit 17,49119,13024,30119,51420,45919,41720,87419,82022,43120,798
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