The closer the net interest rate is to the gross profit rate, the lower the period cost of the enterprise. Gross profit margin reflects the value-added part of goods after production transformation. The more value-added, the more gross profit margin will be. Therefore, if the company's gross profit margin is high and the net interest rate is low, it means that the company's period expenses (such as sales expenses, financial expenses and management expenses) are high, and the management expenses of the enterprise are high.
The net interest rate is also growing for a long time, the higher the better. If the net profit grows faster than the income, the net interest rate will increase, indicating that the company's profitability is increasing, on the contrary, indicating that the company's profitability may be declining.
Extended data:
The relevant requirements of gross profit margin and net interest rate stipulate:
1. Gross profit and income for calculating gross profit margin usually refer to gross profit and income in a certain period divided in a certain way, corresponding to a certain division method and a certain period. When calculating gross profit margin, the calculation caliber of income and cost is the same as that of accounting. For industrial and commercial enterprises, income refers to income excluding VAT output tax.
2. If the growth rate of main business income is faster than the growth rate of net profit, the company's net profit rate will decline, indicating that the company's profitability is declining. On the contrary, if the growth rate of net profit is faster than income, the net profit rate will increase, indicating that the company's profitability is increasing.
3. The net profit rate is more telling than the net profit. However, if there are a large number of non-recurring gains and losses, non-main income and income tax changes in the net profit, the quality of this net profit rate will decline and cannot fully reflect the profitability of the company's business. At this time, the operating profit rate or EBITDA profit rate is a good indicator.
Baidu encyclopedia-net interest rate
Baidu encyclopedia-gross profit margin