What are the three indicators of profitability?

Profitability analysis indicators mainly include operating profit rate, cost profit rate, surplus cash guarantee multiple, return on total assets, return on net assets and return on capital.

In practice, listed companies often use earnings per share, dividends per share, price-earnings ratio, net assets per share and other indicators to evaluate their profitability.

Description of various indicators

Operating profit rate

Operating profit rate is the ratio of operating profit to operating income of an enterprise in a certain period of time.

Gross profit margin of sales

In practice, indicators such as gross profit margin and net profit margin are often used to analyze the profitability of enterprises.

Ratio of profit to cost and expense

The profit rate of cost and expense is the ratio of total profit to total cost and expense of an enterprise in a certain period.

Remaining cash guarantee multiple

The guarantee multiple of surplus cash is the ratio of net operating cash flow to net profit in a certain period, which reflects the guarantee degree of cash income in the current net profit of the enterprise and truly reflects the quality of enterprise surplus.

return on total assets

Return on total assets is the ratio of the total remuneration to the average total assets in a certain period, which affects the comprehensive utilization effect of enterprise assets.

Return on common shareholders' equity

Return on net assets is the ratio of net profit to average net assets of an enterprise in a certain period, which reflects the investment income level of its own funds.

Return on capital

The rate of return on capital is the ratio of net profit to average capital (i.e. capital investment and its capital premium) in a certain period, which reflects the actual return on investment of enterprises.

earnings per share

Earnings per share, also known as profit per share or earnings per share, is a performance evaluation index that reflects the corporate profits or corporate losses that ordinary shareholders can enjoy by holding each share. Calculation of earnings per share includes basic earnings per share and diluted earnings per share.

Price/income ratio

P/E ratio is the multiple of the price of common stock per share of listed companies equivalent to the earnings per share, which reflects the price that investors are willing to pay for the net profit per share of listed companies and can be used to estimate the investment income and risk of stocks.

Net assets per share

Net assets per share is the ratio of the net assets (i.e. shareholders' equity) of listed companies to the total number of ordinary shares at the end of the year.