What indicators are used to judge the quality of a company before stock selection?

1, gross profit margin. On behalf of the bargaining power of products and services, high gross profit means "this price, whether you buy it or not, it's too late to take it!" Dismantling the formation of gross profit can show the core competitiveness of enterprises. The disadvantage of this indicator is that some enterprises have high product pricing and high gross profit, but it is not good business if they don't open and eat for three years (cyclical stock investment is another matter). Therefore, this indicator can basically judge the advantages and disadvantages of the business model by combining the turnover rate and inventory situation.

2. Net interest rate. Net profit is the real shareholder income, and gross profit MINUS expenses is the net profit. In the actual financial report, it is really you who know how to adjust the net profit with expenses. "Expenses" can highly reflect the inconsistent efforts of management. It is so easy to drink Maotai's money to buy big swords for shareholders to reimburse. Therefore, the index of net interest rate can reflect whether an enterprise is a "shareholder-friendly" investment object. Most of the pits for adjusting net profit are state-owned enterprises, and the interests of major shareholders and management are different, so there are various pits. The relationship between gross profit and net profit can be summarized in one sentence: to maintain the core competitiveness (gross profit) of an enterprise with as little expenses as possible, which reflects the professional ability and professional ethics of management.

3. Income growth rate. This reflects the company's business growth space and market share occupation. The change of business is first reflected in the change of income. The so-called quantity first, the product sells well to sell higher. If they are unsalable, they should be sold at a low price. This is business common sense, so the change of income reflects the stage of business development. Open it carefully. Finally, the data are all in the past tense, which can show the ability and strategy of enterprise management and help investors understand the business. But still can't let you see the future of business.