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Sears Canada's gross profit for the three months ended in Apr. 2017 was $85 Mil. Sears Canada's gross profit for the trailing twelve months (TTM) ended in Apr. 2017 was $499 Mil.
Gross Margin % is calculated as gross profit divided by its revenue. Sears Canada's gross profit for the three months ended in Apr. 2017 was $85 Mil. Sears Canada's Revenue for the three months ended in Apr. 2017 was $376 Mil. Therefore, Sears Canada's Gross Margin % for the quarter that ended in Apr. 2017 was 22.59%.
Sears Canada had a gross margin of 22.59% for the quarter that ended in Apr. 2017 => Competition eroding margins
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
* The bar in red indicates where Sears Canada's Gross Profit falls into.
Gross Profit is the different between the sale prices and the cost of buying or producing the goods.
Sears Canada's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as
Gross Profit (A: Jan. 2017 ) | = | Revenue | - | Cost of Goods Sold |
= | 1982.5532883259 | - | 1441.6293711598 | |
= | 541 |
Sears Canada's Gross Profit for the quarter that ended in Apr. 2017 is calculated as
Gross Profit (Q: Apr. 2017 ) | = | Revenue | - | Cost of Goods Sold |
= | 376.20004465282 | - | 291.21083575203 | |
= | 85 |
Gross Profit for the trailing twelve months (TTM) ended in Apr. 2017 was 140.13178057003 (Jul. 2016 ) + 134.93321258773 (Oct. 2016 ) + 139.11856178412 (Jan. 2017 ) + 84.989208900796 (Apr. 2017 ) = $499 Mil.
Gross Profit is the numerator in the calculation of Gross Margin.
Sears Canada's Gross Margin % for the quarter that ended in Apr. 2017 is calculated as
Gross Margin % (Q: Apr. 2017 ) | = | Gross Profit (Q: Apr. 2017 ) | / | Revenue (Q: Apr. 2017 ) |
= | (Revenue - Cost of Goods Sold) | / | Revenue | |
= | 85 | / | 376.20004465282 | |
= | 22.59 % |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange 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.
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
Sears Canada had a gross margin of 22.59% for the quarter that ended in Apr. 2017 => Competition eroding margins
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