Category: Money tips Release Date: 2006-10-25
In the financial situation of the company's research, investors are most concerned about a number of earnings per share. Earnings per share is the company's net profit divided by the company's total equity, reflecting the company's per share by a current profitability. Examine changes in earnings per share over the years is to study the company's operating performance changes in the simple way. However, it is important to note that net profit of the company's financial statements is based on the accounting for certain out of the accounting system does not necessarily reflect the company's actual earnings and adopt a different accounting treatment can be achieved by the profitability of different figures. Compared with other countries, accounting system, relatively speaking, our accounting systems accounted for a net profit than the use of internationally accepted accounting system accounting profit figures usually come out high. Investors should pay particular attention to whether the changes in the company accounts receivable with the company to adapt to changes in revenue, if the receivables, the growth rate of revenue growth greatly exceeded, then most likely part of the profits, income has been included in the final will be beyond recovery to such a net profit figure will of course be discounted.
Also to note, into the cost of annual depreciation of fixed assets is adequate. If these assets, the actual loss and the rate of depreciation is greater than the depreciation rate, so that when the ultimate replacement of these devices, when, it is necessary to pay a higher price than expected, which also would reduce the current number of actual earnings. Earnings per share in the study changes, it must be accompanied by the light of its net profit and total equity value changes. Since many companies have capital to expand the experience, so attention must also be no earnings per share during the comparable figures. The absolute value of the company's net profit may actually be increased, but a higher proportion of delivery due to placement of shares, share earnings per share becomes smaller, it may show signs of reduction. However, if this will be that the company's performance is a recession, these figures should be comparable. However, there have been a large number of placements of the company, paying particular attention to companies in the past year, earnings per share is unduly diluted, thus exaggerating the extent of the current growth. This is because the company is in the past, a relatively small capital base of operations on, you can use less capital relative to the current and the current operating business is in the larger capital base, after placement of shares conducted.
If only from the earnings per share shows that at present there is indeed a big increase, but this is part of the profits may not be the scale of operation because the company resulting from the spread. For example, the company acquired a certain company, the company's profits into the current of the report, it is easy to make earnings per share growth.
