* the company's financial ratio
* Financial ratio of real estate
:: Natural resources
* Is it a benign debt or a bad debt?
* Saving is not an investment.
Let's explain them one by one.
Here are several ratios:
* Gross profit margin (profitability indicator)
Gross profit margin = (sales revenue-sales cost)/sales revenue, indicating how much money can be used for expenses and profit formation in each period after deducting sales cost from sales revenue per yuan. The greater the value, the smaller the proportion of sales cost to sales revenue, so after deducting other expenses and business profits, the higher the company's operating profit will be. It is an important indicator of the company's profitability and the starting point of the company's net profit, which can reflect the competitiveness and profit potential of the company's products.
Usually, how much gross profit margin should reach depends on the organizational status of the enterprise and other costs it must pay. By comparison, on the one hand, we can compare other enterprises in the same industry. If the company's gross profit margin is significantly higher than the level of the same industry, it shows that the company's products have high added value and have cost advantages and strong competitiveness compared with their peers. On the other hand, it can be compared with the historical data of enterprises. If its gross profit margin is significantly improved, the industry in which the company is located is recovering, and the product price is rising if possible. As an investment, we need to consider whether this upward trend is sustainable. Just like Maotai, its share price has soared recently. Excluding the development of its own wine industry, its gross profit margin in the third quarter was as high as 89.2%, which is a very important reason.
* Net operating profit margin (profitability indicator)
Net operating profit margin = earnings before interest and tax/sales revenue, which tells us the company's net operating profit before paying taxes and capital costs.
So, what's the difference between EBIT and net profit? EBIT is the profit obtained by subtracting the capital cost of the enterprise except interest and tax from the sales income. The main difference from net profit lies in excluding the influence of capital structure and income tax policy, that is, investors can evaluate the profitability of enterprises more truly without considering the applicable income tax rate and financing cost when evaluating projects. This has an advantage. No matter how different the income tax rates are between different enterprises in the same industry, or how different the sources of funds are, the profitability of EBIT enterprises can be expressed more accurately.
* Operational leverage (operational capacity indicator)
Speaking of operating leverage, we first need to understand the concept of actual contribution. Actual contribution refers to gross profit minus variable costs (different from fixed expenses such as sales expenses and management expenses that do not change with sales). Operating leverage of the enterprise = actual contribution/fixed cost. The greater this value, the smaller the business risk of the enterprise. When the operating leverage of an enterprise is just equal to 1, it means that the income of the enterprise is just enough to pay the fixed cost, that is, the enterprise is not profitable.
* Financial leverage (operational capacity indicator)
Financial leverage = total used capital (debt and equity)/shareholders' equity, in which the total used capital is the sum of all shareholders' equity and the book value of interest-bearing debt (excluding accounts payable for resale goods and unpaid wages, expenses and taxes). For example, if a company has $50,000 in debt and $50,000 in equity, its financial leverage is 2. This index reflects the role of free funds in enterprise management. The larger the value, the higher the debt ratio, so it is necessary to pay attention to the control of repayment pressure.
Here we want to add a concept: the total risk of enterprise management is actually the product of operating leverage and financial leverage, also known as total leverage. It shows how the known changes in the enterprise will affect shareholders, and it can help us decide whether to invest. In order to ensure good operation, conservatively managed American companies usually keep the total leverage below 5. It is not difficult to analyze that, under a certain total leverage, the financial leverage of enterprises with high level in operating leverage can be lower, and there is no need to increase liabilities, while enterprises with low level in operating leverage need to promote sales through financial leverage, thus increasing corporate profits.
* Debt-to-equity ratio (operational capacity indicator)
Debt-equity ratio = total liabilities/total shareholders' equity, which is used to measure the ratio between external financing (total liabilities) and internal financing (total shareholders' equity) of a company. Most enterprises should try to keep the proportion below 1: 1. Generally speaking, the lower this value, the more conservative the company's financial structure.
* quick ratio &; Current ratio (solvency indicator)
Quick ratio = quick assets/current liabilities
Current ratio = current assets/current liabilities
These two indicators indicate whether the company has enough liquid assets to repay its debts in the coming year. If not, it is usually a signal that the company will face difficulties, and their values are between 2- 1.
* Return on equity (profitability indicator)
This indicator is one of investors' favorite ratios, because with it, we can compare the investment income of company shareholders with other projects.
Return on equity = net income/average shareholder income
All of the above are about the company's financial ratios, so what do these ratios reveal? Why do mature investors bother to study these boring figures? These data are actually indicators of the company's performance. By comparing the data of the company for at least three years with the ratio of other companies in the same industry, we can quickly understand the relative strength of the company and evaluate the return on investment. For example, if a company's ratio in the past three years is ideal and has made great profits, and observing its industry, it is found that its flagship product has been replaced by a competitor's new product, and it faces the potential risk of market share decline, then it is unwise to invest in this seemingly good company.
These ratios are the language used by mature investors, and speaking with ratios is the first step we should take.
Obviously, this ratio is the duration of real estate investment. In my opinion, real estate investment has the advantages of long cycle, high income stability and simple project structure, and is a good choice for primary investors to gain investment experience.
Rich dad thinks that the most important financial ratio of real estate is the cash return rate:
* Cash rate of return
Cash return rate = net cash flow/down payment. For example, if we need to pay a down payment of $654.38+million for a house with a value of $500,000, and then we can earn $2,000 every month after deducting expenses and mortgage, then the cash return rate of this real estate investment is (2000 *12)/100000 = 24%.
If this rate of return meets our investment expectations, shouldn't it start right away?
Wait a minute!
The rich will do one more thing before doing it: due diligence. Through this step, the rich can ensure that they can not only see one side of the coin, but also understand the other side and have a better understanding of investment. Rich dad said, "The sooner you conduct due diligence on investment projects, whether they are enterprises or real estate, stocks, mutual funds or bonds, the safer you can find the projects that are most likely to get cash flow and capital return." In the book, the author lists a list of due diligence, and interested friends can consult it themselves.
After due diligence is no problem, the rich will discuss with their legal advisers and tax advisers how to buy products that can provide the greatest legal protection and tax benefits. I want to say that it is true that mature investors are good at careful calculation.
Mature investors regard the natural resources on the earth (such as oil, natural gas, coal, precious metals, etc. ) as part of their portfolio. This is also something we can think about. For example, rich dad firmly believes in the value of gold. Because of its limited reserves, its value will become more and more prominent with the passage of time.
Mature investors can identify benign debts, expenses and liabilities. Try to think about it, do we have corresponding income and assets for everyone's expenses, liabilities and debts? If so, and our overall cash flow is positive, that is, the inflow is greater than the outflow, then we can judge that this is a benign debt. Obviously, the more benign debts we have, the more we will benefit.
Mature investors know the difference between saving and investing, and can take them as part of their financial plan. Simply put, saving is a passive behavior, but I am more involved in its financial decision-making, just putting it into a plan and waiting for a certain period of time to get more principal, while I have no initiative in the process of money appreciation, such as regular financial management of banks; Investment is an active behavior. Through the analysis of financial management objectives, we should make a reasonable financial management plan, control the timing of buying and selling investment projects, make clear when and what can achieve the expected investment objectives, and constantly transform active income into passive income, and finally realize the goal of wealth freedom.
Let's call it a day. I hope it helps you.