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Best Formula to Pick Stocks 2023 | Stock Fundamental Analysis Part 7
Original: Best Formula to Pick Best Stocks 2023 | Stock Fundamental Analysis నేర్చుకోండిలా ! P7 #stockmarket
Takeaway
Use Gross Profit Margin and EBITDA margins to compare companies' real operational pricing power on a level playing field.
Summary
- Part 7 of 'How to select stock like an expert' fundamental analysis series, focused on profitability ratios
- Explains the P&L flow: Revenue from Operations → Gross Profit → EBITDA → EBIT → PBT → PAT, noting only Revenue from Operations (not Other Income) is used for ratios
- Clarifies why EBITDA matters: it neutralizes depreciation differences between old (fully-depreciated) and new (heavy capex) companies for fair operational comparisons
- Distinguishes EBITDA (for manufacturing/capital-intensive) vs EBIT (for asset-light businesses like AMCs)
- Covers Return on Sales: Gross Profit Margin (= Gross Profit / Net Sales, e.g. 6cr/10cr = 60%) shows pricing power; also Operating, Pre-Tax, and Net Profit margins
fundamental analysisprofitability ratiosstock picking
Original description
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