Find blue chips throughout financial statements (4) income statement - net profit

Find blue chips throughout financial statements (4) income statement - net profit

Finally, net profit shows that if a company really had a profitable business or not. It is almost always great when a company continuously operates in the black and increases net profit steadily.

1. Corporate income tax: This is a tax, which every company should pay to the government as much as the business profit earned. US companies need to pay 35% of their business profit and Korea companies need to pay 22% as corporate income tax.

2. Net profit: The amount of sales subtracted by all costs and taxes.

Companies that are great to invest are in the steady and increasing state of net profit. And we have to look if the company has high portion of net profit for sales.

Coca-Cola that Warren Buffett likes has 21% of net profit rate and a credit-rating agency Moody has 31%. Companies with more than 20% of net profit rate much likely have a long-term competitive advantage. However, we have to be very suspicious doubting the competitiveness and outlook of a company when the interested company has less than 10% of net profit rate.