What does the return on equity (%) reflect about the company?

Return on net assets is the core index reflecting the profitability and management level of listed companies. Change indicators often appear in periodic reports and interim reports. A deep understanding of their connotations and functions is a necessary way for investors to improve their fundamental analysis ability.

Supplementary information:

The calculation formula of ROE is: ROE = net profit ÷ net assets.

Return on common shareholders' equity

I. Return on net assets, also known as return on shareholders' equity, is the percentage of net profit to average shareholders' equity. This indicator reflects the income level of shareholders' equity. The higher the index value, the higher the return from investment.

Second, ROE is the percentage rate obtained by dividing the company's after-tax profit by its net assets, which is used to measure the efficiency of the company in using its own capital.

Take the above companies as an example. Its after-tax profit is 200 million yuan, its net assets are 654.38+0.5 billion yuan, and its return on net assets is 654.38+03.33% (i.e. * 654.38+000%).

Third, the return on equity can measure the efficiency of the company's use of capital invested by shareholders. Make up for the lack of after-tax profit per share. For example. After the company sends bonus shares to the original shareholders, the earnings per share will decline, which will cause the illusion that the company's profitability will decline among investors, but in fact the company's profitability has not changed, so it is more appropriate to analyze the company's profitability with the return on net assets.

4. If the annual target value of ROE is 2. 8%. By the end of April, the ROE was 65,438+0. 6% is reasonable; The return on equity will increase over time (assuming that the monthly net profit is positive).

5. According to Notice No.9 of the Rules for Information Disclosure and Compilation of Public Offering Securities Companies issued by China Securities Regulatory Commission, the formula for calculating the weighted average return on equity (ROE) is: ROE = P/E0+NP ÷ 2+EI× MI ÷ M0-EJ× MJ ÷ M0.

In which: P is the profit during the reporting period; NP is the net profit during the reporting period; E0 is the initial net assets; Ei refers to new net assets such as issuing new shares or debt-to-equity swaps during the reporting period; Ej reduced its net assets for repurchase or cash dividends during the reporting period; M0 is the number of months in the reporting period; Mi refers to the number of months from the following year 1 month to the end of the reporting period; Mj is the number of months from the following year 1 month to the end of the reporting period.