Turnover cost of buying and selling

Trading turnover costs refer to various expenses incurred by enterprises when conducting buying and selling activities, including stock transaction fees, securities transaction taxes, inventory turnover rate, operating costs, etc. These expenses will affect the company's profit margin, capital utilization efficiency, market competitiveness, etc. Therefore, it is very important for investors and managers to understand and control transaction turnover costs.

What are stock trading fees and securities transaction taxes?

Stock trading fees refer to the service fees that investors need to pay to brokers when buying and selling stocks, generally 0.1425%. Whether you are buying or selling, a handling fee will be charged. However, different securities firms have different discount policies. Depending on factors such as the investor’s monthly trading volume, ordering method, etc., investors can receive discounts ranging from 28% to 30% off.

Securities transaction tax refers to the fee that investors need to pay to the government when selling stocks, generally 0.3%. It is only charged on sale and there is no discount. Securities transaction tax can be used to help the national treasury collect revenue and promote people's livelihood and economy.

For example, if an investor buys 1,000 shares of TSMC at 600 yuan per share and sells them at 650 yuan per share, assuming that the handling fee enjoys a 40% discount, then his transaction costs are as follows:

Purchase fee: 600 x 1000 x 0.1425% x 0.6 = 513 yuan

Selling fee: 650 x 1000 x 0.1425% x 0.6 = 555.38 yuan

Securities transaction tax: 650 x 1000 x 0.3% = 1950 yuan

Total transaction cost: 513 + 555.38 + 1950 = 3018.38 yuan

It can be seen that stock transaction fees and securities transaction taxes account for a part of investors' profits. Therefore, attention should be paid to controlling the frequency and scale of transactions to avoid excessive trading and increasing costs.

What is inventory turnover? How to use inventory turnover rate to analyze the quality of a company?

Inventory turnover rate refers to the average number of times a company sells goods within a certain period of time, that is, the sales speed of the company's goods. It can reflect the liquidity of inventory and whether the amount of inventory funds occupied is reasonable. The higher the inventory turnover rate, it means that the company has high capital utilization efficiency, strong sales ability, and less loss from price drops; the lower the inventory turnover rate, it means that the company has too much inventory to sell and the sales ability is declining³.

The formula for calculating inventory turnover is as follows:

Inventory turnover rate (times/year) = operating cost ÷ average inventory

Average inventory = (beginning inventory + ending inventory) ÷ 2

Inventory turnover days = 365 days ÷ inventory turnover rate

For example, if a company's operating costs are 1 million yuan and its average inventory is 200,000 yuan, then its inventory turnover rate is 5 times/year, which means that these inventories can be cleared 5 times during the year; its inventory The turnover days are 73 days, which means that the inventory can be sold out every 73 days on average.

When analyzing inventory turnover, pay attention to the following points:

The sales characteristics of each industry are different, and the reasonable inventory turnover rates between industries are also different. Therefore, it is meaningful to compare with peers or with the same company in the previous period.

Some companies are not suitable to be measured by inventory turnover ratio, such as the financial industry, construction industry, etc. Because their largest inventory is money or land, it is normal for their inventory to be high and their inventory turnover rate to be low.

Companies suitable for measuring inventory turnover include manufacturing, electronics, semiconductor, etc. These companies will lose a lot of money whenever the price of their inventory drops.

Inventory turnover rate will be affected by market supply and demand conditions, raw material price fluctuations, industry low and peak seasons, stocking strategies, etc. Use multiple judgments when evaluating.

An inventory turnover rate that is too high is not good either. It means that the company may not have enough inventory to sell, thereby losing sales opportunities, or it may mean that there is no growth.

What are operating costs? How to evaluate whether a company is making money?

Operating costs refer to the direct costs incurred by the company when producing or providing services, including raw materials, labor, rent, etc. It is similar to the concept of cost of sales, but does not include overhead costs such as administration, marketing, etc.

Operating costs account for a large portion of a company's revenue and therefore have a significant impact on a company's profit margins and competitiveness. If the company can effectively control and reduce operating costs, it can increase gross profit margin and net profit margin, otherwise it will reduce profit margins.

Operating costs can be calculated using the following formula:

Operating cost = Raw material inventory at the beginning of the period + Raw material purchase Raw material inventory at the end of the period + Direct labor + Work in process inventory at the beginning Period Work in process inventory at the end of the period + Manufacturing overhead

The calculation formula of operating costs can help us understand the company's production efficiency and cost control capabilities. If the company can reduce the purchase cost of raw materials, increase the productivity of direct labor, reduce manufacturing expenses and inventory losses, it can reduce operating costs and increase gross profit margins.

Operating costs can also be used to calculate inventory turnover, as discussed earlier. Inventory turnover rate can reflect the company's inventory management level and sales capabilities. If the company can increase the inventory turnover rate, it can reduce the amount of inventory funds occupied and improve the efficiency of capital utilization.

What is the operating cost rate? How to use operating cost ratio to analyze the quality of a company?

Operating cost rate refers to the ratio of operating costs to operating income, that is, how much money a company spends on producing or providing services for every dollar of revenue earned. It can reflect the company's profit margins and competitiveness. The lower the operating cost rate, the larger the company's profit margin and the stronger the competitiveness; the higher the operating cost rate, the smaller the company's profit margin and the weaker the competitiveness.

The formula for calculating operating cost rate is as follows:

Operating cost rate = operating cost ÷ operating income × 100%

For example, if a company's operating income is 5 million yuan and operating costs are 3 million yuan, then its operating cost rate is 60%, which means that for every dollar of revenue earned, 0.6 yuan is spent on production or providing services.

Here are a few things to keep in mind when analyzing operating cost ratios:

Different industries have different characteristics and scale effects, so the reasonable operating cost rates are also different between different industries. Therefore, it is meaningful to compare with peers or with the same company in the previous period.

The operating costs of some industries will be affected by raw material price fluctuations, seasonal changes, exchange rate changes and other factors. Use multiple judgments when evaluating.

The operating cost rate is not as low as possible, but depends on whether it is in line with the company's strategy and positioning. Some companies will deliberately increase operating costs to enhance their advantages in quality, service, innovation, etc., in order to pursue long-term development.

The operating cost rate must also be observed in conjunction with other indicators, such as gross profit margin, net profit margin, inventory turnover rate, etc., in order to fully understand the company's operating status.

Summarize

Trading turnover costs are various expenses incurred by enterprises when conducting buying and selling activities, including stock transaction fees, securities transaction taxes, inventory turnover rate, operating costs, etc. These expenses will affect the company's profit margin, capital utilization efficiency, market competitiveness, etc. Therefore, it is very important for investors and managers to understand and control transaction turnover costs.

Stock transaction fees and securities transaction taxes are fees that investors need to pay when buying and selling stocks, which will take up part of investors' income. Investors should pay attention to controlling the frequency and scale of transactions to avoid excessive trading and increased costs.

Inventory turnover rate refers to the average number of times a company sells goods within a certain period of time, that is, the sales speed of the company's goods. It can reflect the liquidity of inventory and whether the amount of inventory funds occupied is reasonable. The higher the inventory turnover rate, it means that the company has high capital utilization efficiency, strong sales ability, and less loss from price drops; the lower the inventory turnover rate, it means that the company has too much inventory that cannot be sold, and the sales ability is declining.

Operating costs refer to the direct costs incurred by the company when producing or providing services, including raw materials, labor, rent, etc. It is similar to the concept of cost of sales, but does not include overhead costs such as administration, marketing, etc. It can help us understand the company's production efficiency and cost control capabilities.

Operating cost rate refers to the ratio of operating costs to operating income, that is, how much money a company spends on producing or providing services for every dollar of revenue earned. It can reflect the company's profit margins and competitiveness. The lower the operating cost rate, the larger the company's profit margin and the stronger the competitiveness; the higher the operating cost rate, the smaller the company's profit margin and the weaker the competitiveness.