Gross profit margin leverage
factor.formula
Gross profit margin leverage = (last 12 months operating income (TTM) - last 12 months operating costs (TTM)) / last 12 months net profit (TTM)
This formula calculates the ratio of gross profit to net profit in the last 12 months. Among them: * **Operating income <sub>TTM</sub> (last 12 months operating income)**: refers to the total income obtained by the company through its main business in the past 12 months. The rolling calculation using TTM (Trailing Twelve Months) can smooth seasonal fluctuations and more accurately reflect the company's recent income status. * **Operating cost <sub>TTM</sub> (last 12 months operating cost)**: refers to the direct costs incurred by the company for the production or sale of goods in the past 12 months, also using TTM rolling calculation. * **Net profit <sub>TTM</sub> (last 12 months net profit)**: refers to the total profit obtained by the company after deducting all costs, expenses and taxes in the past 12 months, also using TTM rolling calculation. This value can reflect the company's ultimate profitability.
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Operating income for the last 12 months
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Operating costs in the last 12 months
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Net profit for the last 12 months
factor.explanation
The gross profit margin leverage reflects the company's conversion efficiency from gross profit to net profit, that is, how many units of gross profit are needed to support each unit of net profit. This factor can reveal the extent to which a company's taxes and period expenses affect its profitability. A higher ratio usually means that the company has stronger cost control and profitability, but it may also be affected by tax policies. This factor is widely used in quantitative stock selection and is believed to have a certain positive predictive ability for the company's future profit growth. However, when applying it, it is necessary to analyze it in combination with industry characteristics and company specific circumstances, and it should not be used alone as the sole basis for investment decisions.