Analysis of profitability of listed companies

Profitability refers to the ability of enterprises to obtain profits. The stronger the profitability of an enterprise, the higher the return to shareholders and the greater the value of the enterprise. When analyzing profitability, we should pay attention to the profitability of the company's main business. The following are the specific analysis indicators and methods: 1, sales gross margin, that is, gross profit as a percentage of sales revenue. The calculation formula is: gross sales margin = [(sales revenue-sales cost)/sales revenue ]× 100%. It reflects the initial profitability of enterprise product sales and is the starting point of enterprise net profit. Without high gross profit margin, it is impossible to form big profits. Compared with the same industry, if the gross profit margin of the company is significantly higher than the level of the same industry, it means that the company's products have high added value and high product pricing, or the company has cost advantage and competitiveness compared with its peers. Compared with history, if the gross profit margin of the company is significantly improved, it may be that the industry in which the company is located is in a recovery period and the product price has risen sharply. The steel industry in 2003 is a typical example. In this case, investors need to consider whether this price increase can be sustained and whether the company's future profitability is guaranteed. On the contrary, if the company's gross profit margin is significantly reduced, it may be that the industry in which the company is located is fiercely competitive. In the case of price war, it is often a lose-lose outcome. At this time, investors should be vigilant. China's color TV industry in the 1990s is such an example. 2. The net profit rate of sales is the percentage of net profit to sales revenue. The calculation formula is: net profit rate of sales = (net profit/sales revenue) × 100%. It is directly proportional to net profit and inversely proportional to sales revenue. While increasing sales revenue, enterprises must obtain more net profit accordingly, so that the net profit rate of sales will remain unchanged or be improved. By analyzing the fluctuation of net profit rate of sales, enterprises can improve their management level and profitability while expanding sales. 3. Operating profit margin is the percentage of operating profit to sales revenue. The calculation formula is: operating profit rate = (operating profit/sales revenue) × 100%. It can better describe the contribution of the company's main business to profits than the net profit rate of sales, because net profit is based on operating profit plus investment income, subsidy income and net non-operating expenses, and these gains or losses are unsustainable. Excluding these influences can better reflect the changes in the profitability of companies and the differences in profitability of different companies. 4. The net interest rate of assets is the ratio of net profit divided by average total assets. The calculation formula is: net interest rate of assets = (net profit/average total assets) × 100% = (net profit/sales revenue) × (sales revenue/average total assets) = net interest rate of sales × asset turnover rate. The net interest rate of assets reflects the comprehensive effect of enterprise's asset utilization, which can be decomposed into the product of net interest rate and asset turnover rate, so that we can analyze what causes the increase or decrease of net interest rate of assets. 5. ROE is the ratio of net profit divided by average owner's equity. The formula is: ROE = net profit/average total owner's equity × 100% = (net profit/average total assets )× (average total assets/average owner's equity )×100% = (net profit/average total assets) /( 1-). The following interpretation will be made through the decomposition of this indicator.