Gross profit = operating income - operating costs (this is not a good business)
Gross profit - operating expenses = operating profit (there is no real ability to make money)
Second, the indicators in detail:
(1) Gross Profit Margin -------> This is not a good business! The level of gross margin responds to the initial profitability of the company.
(2) operating margin: identify whether "earn more, spend more", there is no real ability to make money!
("Operating Expense Rate" connects the "Gross Profit Margin", "Operating Profit Margin", it can be judged by the following indicators of a company's relative position in the industry:
②, operating expense ratio & lt; 7%, not only has a very large scale, in the operation of the cost is quite save.
③, operating expense ratio & gt; 20%, may appear in the following industries:
a, private label, advertising and promotion of the cost is very expensive.
b, companies that do not yet have economic scale, because the denominator (operating income) is small, so the indicator is high.
c. Sectors where the market is booming, but still requires continuous investment.
d, industries that require constant promotion to have repeat customers, such as supermarkets.
e, catering industry. (The expense ratio of the catering industry is generally more than 33%, so the gross margin of the catering industry must also be more than 50% in order to sustain the business.)
(3) operating margin of safety rate = (operating margin / gross margin): it responds to a company's ability to fight against market volatility, the company's moat is high? ------> How is the ability to resist risk?
>20%, indicating a strong resistance to risk.
(4) net interest rate (= net profit / operating income): after deducting the tax whether to earn money? (at least >% to invest)
(5) Earnings per share (EPS) (= net profit / total shares) ------> net profit into each share can help shareholders earn how much money?
(6) Return on Equity (= net profit / shareholders' equity), also known as the rate of return to shareholders (ROE) ------> relative to the shareholders out of the money, how much benefit can be obtained. (> 20% good company, <7 is not worth investing)
Third, the actual indicator comparison: Wanxin media indicators
Gross profit margin is an important indicator of the profitability of the enterprise, to look at least five years of indicators.
After the comparison, the relevant indicators of Wanxin Media are moderate.