How to look at a company's profitability? The first impression is net profit, which is a positive expression of profit; Conversely, a negative net profit is a loss. The above understanding is simple and inaccurate. To understand the company's profitability, we can analyze it in depth from the financial statements, and calculate the profitability with financial data for performance evaluation.

Profit rate includes: operating net profit rate, total assets net profit rate and equity net profit rate, which is briefly introduced below.

Net operating profit margin

Operating net profit rate refers to the ratio of net profit to operating income, and the calculation formula is: operating net profit rate = (net profit/operating income) * 100%. As can be seen from the formula, the greater the ratio, the stronger the profitability of the company.

Net interest rate of total assets

The net interest rate of total assets is the key to the company's profitability. The calculation formula is: net interest rate of total assets = (net profit/total assets) * 100%, which is obviously the ratio of net profit to total assets. The increase of net interest rate of total assets makes the net interest rate of equity increase correspondingly, which is explained in the calculation of net interest rate of equity.

Net interest rate of equity

The net interest rate of equity is also the ratio of net profit to shareholders' equity. The calculation formula is: net interest rate on equity = (net profit/shareholders' equity) * 100%. As can be seen from the formula, shareholders' equity is shareholders' investment and net profit is shareholders' income. This ratio reflects the net profit realized for every 65,438+0 yuan shareholders' equity. The higher the ratio, the stronger the overall profitability.

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