1, can make money: return on equity (ROE)
"Buying stocks is essentially buying companies. Only when this company makes money can you profit from it! The stronger the company's ability to make money, the higher our expected return on investment. "
In the investment market, one of the core indicators to measure the profitability of enterprises is "return on net assets", which is abbreviated as ROE in English.
ROE= net profit ÷ net assets, which is used to measure the profitability of a company using its own capital. Generally speaking, the bigger the better.
For example, Xiao Wang opened a supermarket and contributed 6,543,800 yuan (net assets) by himself. After a year of operation, he made a net profit of 200,000 yuan (net profit). How to measure the profitability of supermarkets?
Divided by the net profit of 200,000 yuan, the net assets are 6,543.8+0,000 yuan, and the return on net assets is 20%.
Return on net assets (ROE)= net profit (200,000) ÷ net assets (654.38+0,000) = 20%.
High return on equity (ROE) indicates strong profitability. In addition, we should also pay attention to the persistence of ROE, which has been relatively high for many years in a row, in order to show that the company's profitability is really good. Excellent companies usually maintain a return on equity of more than 20% for five consecutive years.
2. Earning real money: the cash content of net profit.
People who have done business should know that in real life, we don't always pay with one hand and deliver with the other. Sometimes we sell things, but people may owe money first, then pay, and sometimes they don't even come back (to the court).
This is also what we often say, the money earned must be safe, and listed companies can only make good book profits, and real money is the real money. At this time, it is necessary to use the cash content of net profit as an indicator. Simply understand how much of the net profit earned is real money, and the white bars are countless!
Cash content of net profit = net cash flow from operating activities ÷ net profit. The bigger this indicator is, the stronger the sales repayment ability is.
For example, Xiao Wang opened a supermarket and sold goods worth 654.38+10,000 yuan to customers. The money boss paid 654.38+10,000 yuan in cash. In this case, the money earned by the supermarket is real money, not adulterated.
The goods sold to the customer Bai Boss amounted to 200,000 yuan, and Bai Boss took the goods without paying cash. In this case, the money earned by the supermarket is not necessarily true, because the 200,000 owed by the white boss may not be repaid.
The cash content of net profit is a measure of whether the company has received cash in the profits earned.
The higher the index, the stronger the sales repayment ability, and the higher the industry status and voice.
The smaller the index is, or it is negative, indicating that most products are sold on credit, and there is no withdrawal of funds, indicating that the business situation is not good and the profit may not be true.
The cash content of a good company's net profit for five consecutive years should be greater than 80%, and the average cash content of its net profit for five years should be greater than 100%.
3. Good products: gross profit margin
The concept of gross profit margin is easier to understand than everyone else. The company's money comes from the products it sells or the services it provides. Different companies can get different profits by selling the same mobile phone, and one of the indicators to measure this is the gross profit margin. "
Gross profit margin = (operating income-operating cost) ÷ Operating income is an indicator to measure the added value of a company's products or services, and the bigger the better.
Specifically, high gross profit margin has two advantages:
Under normal circumstances, the same sales revenue makes more money.
When the market is depressed, companies with high gross profit margins have the ability to reduce prices and promote sales. Even after the price reduction, the company can still make a profit.
However, companies with low gross profit margins are not so lucky. Very low gross profit margin is originally meager profit. In depressed years, price reduction may lead to losses, and failure to reduce prices will lead to a decline in sales, which is likely to lead to the company's crisis.
For example, Xiao Wang runs a supermarket. The purchase price of a brand of liquor in 40 yuan is 100 yuan. The price difference in 60 yuan is the gross profit. Divided by the selling price 100 yuan, the gross profit margin is 60%.
Gross profit margin = (operating income 100 yuan-operating cost 40 yuan) ÷ operating income 100 yuan =60%.
High gross profit margin, strong product competitiveness, welcomed by the market, strong anti-risk ability. Low gross profit margin, poor product competitiveness and weak anti-risk ability.
Excellent companies usually have a gross profit margin of more than 40% for five consecutive years.
4. Low risk: asset-liability ratio
We emphasize that when we make any investment, the first thing that comes to mind is the risk geometry. Investment can't just focus on making money, otherwise it's not worth the loss if it's too radical. There are many indicators to measure the business risk of a company, and the asset-liability ratio is one of them.
Asset-liability ratio = total liabilities/total assets, reflecting the debt ratio of a company. Borrowing money will amplify both benefits and risks, just like leverage, so borrowing money is also called adding leverage.
For example, Teacher Wang Cheng opened a supermarket, paid 1 10,000 yuan (net assets) and borrowed 500,000 yuan (liabilities), totaling10.5 million yuan (total assets). How to measure whether the company is safe? With the borrowed money of 500,000 yuan, divided by * * * the total amount of money is 654.38+0.5 million yuan, and the asset-liability ratio is 33%.
Asset-liability ratio = 500,000 liabilities ÷ total assets 65438+500,000 =33%
The higher the asset-liability ratio, the greater the debt ratio and the greater the risk. The asset-liability ratio is low, the liabilities are reasonable and the risks are relatively small.
Excellent companies usually have an asset-liability ratio of less than 60% for five consecutive years.
5. More dividends: dividend ratio.
Finally, we have to mention that when we invest in stocks for the purpose of making money, we need to pay attention to their dividends. At this time, we can see whether the boss of this company is willing to pay dividends generously through the dividend ratio.
Dividend rate (also known as dividend payment rate and dividend payment rate) = total dividend ÷ net profit, which measures the percentage of net profit that the company is willing to give back to shareholders in cash.
Generally speaking, a larger proportion is better, so that we can get more dividends. Of course, some industries, such as high-tech companies, should be treated differently because of their particularity.
For example, Xiao Wang opened a supermarket, and this year's net profit was 6,543.8+0,000, of which 500,000 was given to all shareholders, and the dividend ratio was 50%. Xiao Wang is still very generous.
Dividend proportion = dividend 500,000/profit 1 10,000 = 50%
This indicator is large, indicating that the boss is generous and has made real money.
If the index is small or zero, it means that either you don't make money or your boss is a miser.
Good companies usually have a dividend payout ratio of more than 25% for five consecutive years.
You must keep these five indicators in mind, always review and review them, and use them as guiding lights to guide us to find excellent and good companies.
In addition to these five main indicators, there are 1 auxiliary indicators, that is, the time to market is more than 3 years. Because many companies will beautify their financial data as much as possible in order to go public, so as to meet the conditions of listing. After the successful listing, it won't be long before you start to remove makeup financially and show your true colors. Therefore, if you have been listed for more than 3 years, you can avoid some new listed companies that have already made financial remedial classes.
Of course, these indicators are not enough. With more in-depth analysis and screening methods, future financial reports can be further studied.
Step 6 practice screening
You can use the tool "I want money" and enter the corresponding screening conditions to screen more than 4,000 A-share companies.
Screening website: www.iwencai.com
Step 1: Choose a company with strong profitability. Look at roe (return on net assets), and enter the following screening criteria in the magnifying glass of "I ask wealth App":
20 16 by 2020, the roe will be above 20%.
Step 2: Choose real money companies, look at the cash content of net profit, and enter the following screening criteria in the magnifying glass of stock selection of wealth management App:
From 20 16 to 2020, the return on net assets will be more than 20%, and the cash content of net profit will be more than 80%.
After this step, there are 48 companies left.
Step 3: Choose a company with good products and see the gross profit margin.
In the stock selection magnifying glass of "I want money App", enter the following filter criteria:
From 20 16 to 2020, the return on net assets will be more than 20%, the cash content of net profit will be more than 80%, and the gross profit margin will be more than 40%.
After this step, there are 1 1 companies left.
Step 4: Choose low-risk companies and see the asset-liability ratio.
In the stock selection magnifying glass of "I want money App", enter the following filter criteria:
From 20 16 to 2020, the return on net assets will be more than 20%, the cash content of net profit will be more than 80%, the gross profit margin will be more than 40%, and the asset-liability ratio will be less than 60%.
After this step, there are 10 companies left.
Step 5: Choose companies with high dividends and see the dividend rate.
In the magnifying glass of "I asked Wealth App", enter the following filter conditions:
From 20 16 to 2020, the return on net assets will be more than 20%, the cash content of net profit will be more than 80%, the gross profit margin will be more than 40%, the asset-liability ratio will be less than 60%, the dividend rate in 20 16 will be more than 25%, and the dividend rate in 20 17 will be more than 25%.
After this step, there are still seven companies left.
Step 6: Choose companies that have been listed for a long time.
In the stock selection magnifying glass of "I want money App", enter the following filter criteria:
From 20 16 to 2020, the return on net assets will be more than 20%, the cash content of net profit will be more than 80%, the gross profit margin will be more than 40%, the asset-liability ratio will be less than 60%, the dividend rate in 20 16 will be more than 25%, and the dividend rate in 20 17 will be more than 25%.
The good companies we choose are all based on the fact that all the data given by the company are true and do not form any investment advice. What should we do if there is financial fraud? What is the future prospect of a good company's industry? What is the current valuation? Is it different from the valuation of the whole industry? (Valuation method) These issues should be carefully analyzed in the financial report. Just as we know a person, we should not only look at the appearance, but also look at the inner connotation.
Two, briefly describe the four indicators needed for almond screening (the financial report will explain in detail)
1. The non-fish eggs with female buttons are between10% and 20%.
2. The ratio of cash received from selling goods and providing services to operating income >; 100%
3. The ratio of net cash flow generated from operating activities to net profit >; 80%
4. Ratio of goodwill to net assets
Belonging to the parent company means belonging to the owner of the parent company.
We all know that some listed companies will have subsidiaries, right? Then when this subsidiary 100% is owned by this listed company, the income earned by this subsidiary will definitely belong to it.
However, when this subsidiary (suppose it is B), the listed company A we studied holds shares with another company C, the income obtained by this subsidiary B will be distributed according to the shareholding ratio, one part will be enjoyed by A and the other part will be given to C.
At that time, the part belonging to A belonged to the parent company, plus the part created by A himself and the part belonging to other subsidiaries, which added up to our net profit attributable to the parent company.
What does that mean?
Deduction is what remains after deducting non-recurring gains and losses.
We all know that the daily business income of an enterprise is generally sustainable, but it does not rule out that there will be some unexpected income, just like you won the lottery today and may not win again next month. It is difficult to maintain income that does not come from day-to-day operations. Therefore, when analyzing this data, we should deduct the non-recurring gains and losses and only consider the part that can continue.
Roe, as we said above, is the return on equity. Distributing your net profit according to your net assets is the real measure of the rate of return that our investors can get.
Then according to the above explanation: non-ROE= (net profit attributable to owners of the parent company-non-recurring gains and losses)/net assets.
The key indicator is the ratio of cash received from selling goods and providing services to operating income.
It measures the proportion of cash received in a company's annual operating income.
Theoretically, the greater the value, the better, which can be greater than 100%, that is, there are unsold goods but cash has been recovered. There will be great differences in different industries, such as real estate enterprises, because they have sold a lot of faster houses and the houses have not been delivered yet, which cannot be regarded as operating income or profits, but the money has been obtained and can be included in the operating cash flow inflow. Therefore, this indicator of many housing enterprises is very high.
These two difficult indicators will be explained in detail later. The content selected in this article does not constitute investment advice!
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