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Return On Capital Employed Overview: Procter & Gamble

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Looking at Q4, Procter & Gamble (NYSE: PG) earned $3.48 billion, a 0.81% increase from the preceding quarter. Procter & Gamble also posted a total of $17.70 billion in sales, a 2.81% increase since Q3. In Q3, Procter & Gamble earned $3.45 billion, and total sales reached $17.21 billion.

What Is ROCE?

Changes in earnings and sales indicate shifts in Procter & Gamble’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q4, Procter & Gamble posted an ROCE of 0.07%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Procter & Gamble's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q4 Earnings Insight

Procter & Gamble reported Q4 earnings per share at $1.16/share, which beat analyst predictions of $1.01/share.

 

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Posted-In: Earnings News