I don’t know if Aurora counts in increased value in biological assets in their provided gross margin calculation but it feels off. It is a very joyful number. Capital turnover rate will give more insight into the validity of that claim of 65% gross margin. Revenue (55196) divided by total assets (1910716) gives 0,028887.. That is approximately 2,9%. Multiplying profit margin with capital turnover rate gives 0,01885. An ROI from a project perspective is thus approximately 1,9%. Link to financial statement used for Aurora can be found here.

Aurora vs Canopy final thoughts

Aurora claim to have a higher profit margin than Canopy during the full year for 2018, given the amount of assets under Auroras control I am inclined to believe that this indeed should be the case. However the low capital turnover rate for Aurora in comparison with Canopy makes Aurora a worse investment opportunity from a project perspective compared to Canopy.

DuPont found that companies with a lot of assets usually have lower capital turnover and higher profit margin compared with companies who do not run a capital intense business. After looking at this analysis I can conclude that given the capital intense nature of the cannabis industry it needs a good profit margin to make the ROI competitive with the general market. Looking forward I wish to se increased capital turnover and a profit margin that holds steady. If profit margins decline for cannabis then it is very important for a future market leader to increase capital turnover to compensate for this.