Stock selection is divided into fundamentals and technical aspects. For fundamentals, you need to learn to read the annual reports of listed companies. Let me tell you how to correctly interpret the annual reports of listed companies?

The annual report release period is approaching again. Investors often have little knowledge of the research on annual reports, so it is necessary to do some homework in advance. So, how to interpret the annual reports of listed companies? Financial Manager will tell you.

If you only look at simple indicators such as earnings per share and net assets per share, you will easily fall into misunderstandings one after another. How to remove falsehoods from annual report data and keep true, and find out the core issues in the operation of listed companies, has become a skills that most investors wish to master.

So how do experts study the annual reports of listed companies? Investors may wish to learn from it. A fund manager summarized some tips for studying annual reports and pointed out that analyzing a listed company's annual report from a professional perspective mainly looks at five major indicators:

First, revenue growth. For revenue growth, we cannot simply look at its numerical changes, but we must decompose it and use the company's recent information announcements to judge the relationship between "price and volume" in its growth components. For example, the growth of production scale, expansion depends mostly on the growth of "quantity"; if the production scale remains unchanged, the income growth will come more from the growth of "price". At the same time, you can also learn from the standard index of industry value to observe changes in the past year and make year-on-year and month-on-month comparisons to confirm the quality of corporate value growth.

The second is gross profit margin. The increase in cost items such as raw materials, labor costs, depreciation, etc. will have a downward drag on gross profit margin, which requires a judgment on whether the company is using value leverage correctly. If used correctly, the relevant downward trend in gross profit margin is a reasonable expectation; on the contrary, it is necessary to consider whether the effectiveness of cost management of listed companies is appropriate.

The third is net profit. Net profit is mainly composed of main business profits and other business profits, and its composition ratio is of great significance to the value judgment of listed companies. Through the source of net profit, analyze the size of the contribution and judge the health and sustainability of its income. In addition, year-on-year and month-on-month data on net profit are also of great value. Combined comparison will make the judgment more comprehensive and objective. Especially when judging that a listed company will have a performance turning point, the value of month-on-month data will be further highlighted.

How to correctly interpret the annual reports of listed companies? All introduced.