5 Stocks With High Net Income Ratio to Scoop Up

Profitability analysis is one of the best ways to evaluate the prospects of a company. It is used in detecting a profitable company over a loss-making one. A company with a high level of sales surplus can not only meet all its operating and non-operating costs, but also make more profits.

In this context, it may be wise to invest in shares of a company with a high level of profitability as it normally ensures high returns. As a result, the simplest and most transparent way of checking a companys profitability is by using accounting ratios. There are a variety of profitability ratios, from which we have selected net income ratio here as it is the most useful and simplest profitability metric.

Net Income Ratio

There are a variety of profit ratios like gross income ratio, operating income ratio, pretax profit margin and net income ratio, which can be used to find out a companys profit generating abilities. But net income ratio is widely accepted as the most conservative of the above-mentioned ratios.

Net income in simple words is total earnings a company makes after deducting all the expenses from its sales revenue. Net income ratio or net profit margin is a ratio of a companys net income and sales revenue. A high net income ratio shows that the company is able to effectively manage all its business activities, including production, administration, selling, etc.

Screening Parameters

Net income ratio is not the only indicator of future winners. So, we have added a few more criteria to ....

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