![]() ![]() On its own, that's a standard return, however it's much better than the 10% generated by the Semiconductor industry. So, Fuzhou Rockchip ElectronicsLtd has an ROCE of 14%. Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities )Ġ.14 = CN¥410m ÷ (CN¥3.4b - CN¥485m) (Based on the trailing twelve months to December 2021). Analysts use this formula to calculate it for Fuzhou Rockchip ElectronicsLtd: Understanding Return On Capital Employed (ROCE)įor those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. So on that note, Fuzhou Rockchip ElectronicsLtd (SHSE:603893) looks quite promising in regards to its trends of return on capital. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed.
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