The rate of return on net assets is the embodiment of the ability of net assets to create value, and it is also an indicator that can truly reflect the operating conditions of enterprises. The essence of investment is to make money. How much money is invested and how much money can be earned every year is the most intuitive.
Therefore, the return on net assets is the most important indicator to reflect the profitability of enterprises.
In addition, the high rate of return on net assets shows that enterprises have the ability to obtain excess profits. If this situation continues, it shows that enterprises have certain barriers. The higher the ROE, the stronger the barrier, and the greater the possibility of continuing to obtain excess profits in the future.
No matter what industry, ROE standards should be unified. If the overall ROE of the industry is low, it means that the industry is not worth investing.
Extended data:
In the analysis of corporate financial reports of listed companies, other most important indicators: 1, net profit growth rate.
The growth rate of net profit is one of the important indicators reflecting the growth of enterprises. However, the high growth rate of net profit does not mean that shareholders will definitely get high returns. The specific situation is analyzed in detail.
If the growth depends on continuous financing, and the ROE cannot be maintained or improved simultaneously, it shows that the dilution of equity reduces the value created by the growth for shareholders, and investors may not get high returns.
In addition, we must also examine whether the quality of growth is high or not and whether it can be sustained. Therefore, the growth rate of net profit can not directly reflect the true nature of the enterprise, and can be better judged by combining other fundamentals. Otherwise, it is easy to fall into the trap of high growth.
2. Gross profit margin
Gross profit margin is an important index to examine the profitability of enterprises. The gross profit margin of different industries varies greatly. Of course, the higher the better. An enterprise with a gross profit margin of over 50% like Maotai is likely to be a good investment target.
Because the net interest rate can be adjusted by cost control or other means, it cannot directly reflect the competitiveness of enterprise products, while the gross profit rate can directly reflect the profitability and competitiveness of enterprises. High gross profit margin is usually one of the characteristics of barriers.
High gross profit margin does not mean high net interest rate. If the enterprise's expenses are not properly controlled or the industry is special, it will lead to high gross profit margin and low net interest rate.
For example, the gross profit margin of service industry is generally high, but the net profit margin of specific enterprises is very different, which is closely related to the operating efficiency and cost control ability of enterprises.
3. Net interest rate
The net interest rate comprehensively reflects the profitability of enterprises and is the main index that affects the actual operating performance of enterprises. Generally speaking, the higher the net interest rate, the better, but the standards of net interest rate in different industries should be different.
Some industries have low net interest rate, but high asset turnover rate and high operating income, which also have investment value. Home appliance chain industry is a typical representative.
4. Debt ratio
Excessive debt ratio means high risk, and the solvency of enterprises is very important. Once there is a problem with the turnover, it may involve the life and death of the enterprise. Sometimes high debt ratio does not necessarily mean high risk, and in-depth analysis can lead to correct conclusions.
For example, the gross profit margin of service industry is generally high, but the net profit margin of specific enterprises is very different, which is closely related to the operating efficiency and cost control ability of enterprises.