Educational material from 
What you will learn
- Check identity, reporting period and units for both sets of evidence.
- Calculate the same profit measure using the correct revenue base.
- Distinguish a comparable observation from a complete company assessment.
Read the headings before the largest numbers
Report card A covers a fictional full year and states revenue of SEK 2,000,000 and net profit of SEK 160,000. Card B covers the same full year but uses thousands of kronor: revenue 1,500 and net profit 135. Multiply B’s amounts by 1,000 before comparing values in kronor.
Record the same currency, period and definition of profit on the comparison sheet. Here we assume matching full years, ordinary revenue and net profit after every cost in the model. The cards contain no real company names. Real evidence also requires checking group versus parent company, the report’s definitions and any changes in those definitions.
If the table does not fit, scroll it sideways.
| Measure | Company A | Company B |
|---|---|---|
| Revenue | SEK 2,000,000 | SEK 1,500,000 |
| Net profit | SEK 160,000 | SEK 135,000 |
| Net margin | 8 % | 9 % |
| Stated share price | SEK 20 | SEK 200 |
More profit in money is a different question from margin
A’s net margin is 160,000 / 2,000,000 = 8 percent. B’s is 135,000 / 1,500,000 = 9 percent. A has greater revenue and greater net profit in kronor, while B has the higher net margin in this evidence. Write these three comparisons separately rather than reducing them to one winning company.
The stated share prices, SEK 20 for A and SEK 200 for B, do not determine which share is cheap relative to its company’s economics. Share counts, rights and other information are missing. A lower unit price is therefore no shortcut to that conclusion. The margin table also does not establish the shares’ future returns.
A period mismatch needs new evidence
Suppose you discover that B’s figures actually cover half a year. The original full-year comparison then loses its basis. Do not automatically double B’s figures to create a year: the exercise provides no following-half data or evidence about variation between periods. Obtain comparable evidence or explain explicitly that the periods differ.
Write three unanswered questions: What costs are included? Is the profit measure defined for both companies? What do operations and debts look like? A combined score from two numbers cannot replace these questions. Choose one question to investigate further using companies’ own reports.
Reuse the comparison fields in the next exercise
Copy fields for identity, source, period, currency, unit, profit definition, calculation and missing evidence. Ask the checker to start with the headings. If a value is not comparable, leave the comparison open and explain why. A clearly marked gap is more useful than a precise percentage from the wrong period.
Investiq’s company-search guide is the next step for checking identity and observation time. Read reports separately, using the concept lessons for calculations. This page promises no dedicated comparison tool, report import or ranking feature in the app. The material is a manual exercise that works without an account.
Try it yourself
A new fictional full-year card C reports revenue of 900 thousand kronor and net profit of 72 thousand kronor. Card D reports revenue of SEK 600,000 and net profit of SEK 60,000 for the same full year. Calculate both margins. Which has more net profit in kronor and which has the higher margin?
Show the solution and explanation
C has an 8 percent margin and D has 10 percent. C has greater net profit in kronor; D has the higher margin.
C: 72 / 900 = 0.08; the shared thousands unit cancels in the ratio. C’s profit is SEK 72,000 against D’s SEK 60,000. D: 60,000 / 600,000 = 0.10. Different measures therefore answer different comparison questions.
Check your understanding
Can B’s half-year amounts automatically be doubled into comparable full-year figures?
No. The following half-year’s information and possible variation are missing.
Does a price of SEK 20 prove A is the cheaper investment?
No. The unit price alone does not establish that company valuation.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More activities on this topic
Document and examine companies
Sources and examples
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
