Did Fujian Dongbai (Group) Co.,Ltd. (SHSE:600693) Use Debt To Deliver Its ROE Of 4.7%?
Did Fujian Dongbai (Group) Co.,Ltd. (SHSE:600693) Use Debt To Deliver Its ROE Of 4.7%?
Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). To keep the lesson grounded in practicality, we'll use ROE to better understand Fujian Dongbai (Group) Co.,Ltd. (SHSE:600693).
Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In simpler terms, it measures the profitability of a company in relation to shareholder's equity.
Check out our latest analysis for Fujian Dongbai (Group)Ltd
How Is ROE Calculated?
The formula for ROE is:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for Fujian Dongbai (Group)Ltd is:
4.7% = CN¥197m ÷ CN¥4.2b (Based on the trailing twelve months to September 2022).
The 'return' is the income the business earned over the last year. So, this means that for every CN¥1 of its shareholder's investments, the company generates a profit of CN¥0.05.
Does Fujian Dongbai (Group)Ltd Have A Good Return On Equity?
By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. The image below shows that Fujian Dongbai (Group)Ltd has an ROE that is roughly in line with the Multiline Retail industry average (4.8%).
SHSE:600693 Return on Equity December 7th 2022So while the ROE is not exceptional, at least its acceptable. While at least the ROE is not lower than the industry, its still worth checking what role the company's debt plays as high debt levels relative to equity may also make the ROE appear high. If a company takes on too much debt, it is at higher risk of defaulting on interest payments. Our risks dashboardshould have the 4 risks we have identified for Fujian Dongbai (Group)Ltd.
How Does Debt Impact ROE?
Most companies need money -- from somewhere -- to grow their profits. The cash for investment can come from prior year profits (retained earnings), issuing new shares, or borrowing. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the use of debt will improve the returns, but will not change the equity. That will make the ROE look better than if no debt was used.
Combining Fujian Dongbai (Group)Ltd's Debt And Its 4.7% Return On Equity
Fujian Dongbai (Group)Ltd does use a high amount of debt to increase returns. It has a debt to equity ratio of 1.28. The combination of a rather low ROE and significant use of debt is not particularly appealing. Debt does bring extra risk, so it's only really worthwhile when a company generates some decent returns from it.
Conclusion
Return on equity is useful for comparing the quality of different businesses. A company that can achieve a high return on equity without debt could be considered a high quality business. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE.
But when a business is high quality, the market often bids it up to a price that reflects this. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. Check the past profit growth by Fujian Dongbai (Group)Ltd by looking at this visualization of past earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
許多投資者仍在學習分析股票時可能有用的各種指標。這篇文章是為那些誰想要了解股權回報率 (ROE).為了保持課程的實用性,我們將使用 ROE 來更好地了解福建東柏(集團)有限公司。, 股份有限公司 (股份編號:600693)。
股權回報率或 ROE 是用於評估公司管理層利用公司資本的效率的關鍵衡量標準。簡單來說,它衡量公司相對於股東權益的盈利能力。
查看我們對福建東柏(集團)有限公司的最新分析
如何計算 ROE?
該 對於魚卵配方 是:
權益回報率 = 淨利潤(來自持續經營業務)÷ 股東權益
因此,根據以上公式,福建東柏(集團)有限公司的 ROE 為:
4.7% = 1 億 7 千萬人民幣 ÷ 人民幣 4.2 億元(以截至 2022 年 9 月為止的最後十二個月計算)
「回報」是企業在過去一年賺取的收入。因此,這意味著公司每投資 1 元的股東都會產生 0.05 元的利潤。
福建東柏(集團)有限公司股權回報率良好嗎?
通過將公司的 ROE 與其行業平均值進行比較,我們可以快速測量其效果。但是,這種方法僅作為粗略檢查有用,因為公司在同一行業分類中確實有很大不同。下圖顯示福建東柏(集團)有限公司的 ROE 大致符合多線零售行業平均水平(4.8%)。
股東指數:600693 二零二二年十二月七日股本報表因此,儘管 ROE 並不例外,但至少它可以接受。儘管至少 ROE 不低於行業,但仍值得檢查該公司債務相對於股票的高債務水平所扮演的角色也可能使 ROE 顯得很高。如果公司承擔過多債務,則拖欠利息的風險會較高。我們的風險儀表板應具有福建東柏(集團)有限公司的 4 個風險。
債務如何影響 ROE?
大多數公司都需要錢-從某個地方---來增加他們的利潤。投資現金可以來自上一年的利潤(保留盈利),發行新股或借貸。在前兩種情況下,ROE 將捕獲這種資本的使用以增長。在後一種情況下,使用債務將提高回報,但不會改變權益。這將使 ROE 看起來比沒有使用債務更好。
結合福建東柏(集團)有限公司債務及其 4.7% 股本回報率
福建東柏(集團)有限公司確實利用高額債務來增加回報。它的債務與權益比率為 1.28。相當低的 ROE 和大量使用債務的組合並不是特別吸引人。債務確實帶來額外的風險,所以當一家公司從中產生一些體面的回報時,它才是真正值得的。
结论
股本回報率對於比較不同企業的質量非常有用。可以在沒有債務的情況下實現高股權回報的公司可以被認為是一種高質量的業務。如果兩家公司的債務與股權相同水平,而一家公司的 ROE 較高,那麼我通常更喜歡 ROE 較高的公司。
但是,當一個企業是高質量的時候,市場往往會出價反映這一點的價格。利潤增長率與股票價格中反映的預期相比,尤其值得考慮。查看福建東柏(集團)有限公司過去的盈利增長情況,通過查看過去盈利,收入和現金流量的可視化。
當然, 通過尋找其他地方,您可能會發現出色的投資。 因此,請先看看這個 自由 有趣的公司名單。
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這篇文章由簡單牆聖是一般性質. 我們僅使用公正的方法,根據歷史數據和分析師預測提供評論,我們的文章並不打算作為財務建議。 它並不構成購買或出售任何股票的建議,也不會考慮您的目標或您的財務狀況。我們的目標是為您帶來由基本數據驅動的長期集中分析。請注意,我們的分析可能不會考慮最新的價格敏感公司公告或定性材料。簡易華街在提及的任何股票中都沒有倉位。
譯文內容由第三人軟體翻譯。
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