Profit Margin
Profit margin measures the percentage of revenue algostocks.com that remains as profit after all expenses 방산 관련주 are deducted. A higher profit margin indicates better cost control and pricing power, contributing to financial stability.
Profit Margin=Net IncomeRevenue×100\text{Profit Margin} = \frac{\text{Net Income}}{\text{Revenue}} \times 100
- Example: A company with a net income of $50 million and revenue of $500 million has a profit margin of 10%.
Current Ratio
The current ratio measures a company’s ability to meet its short-term obligations with its short-term assets. A higher current ratio indicates better liquidity and financial health.
Current Ratio=Current AssetsCurrent Liabilities\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}
- Example: A company with current assets of $300 million and current liabilities of $150 million has a current ratio of 2, indicating strong liquidity.
Industry-Specific Considerations
Different industries have unique financial characteristics that impact the assessment of financial health.
Example: A company with a net income of $200 million and shareholders’ equity of $1 billion has an ROE of 20%, indicating efficient use of equity capital.