Market Overview

Return On Capital Employed Overview: BIO-key International

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During Q2, BIO-key International's (NASDAQ: BKYI) reported sales totaled $307.14 thousand. Despite a 3.92% in earnings, the company posted a loss of $1.37 million. BIO-key International collected $522.49 thousand in revenue during Q1, but reported earnings showed a $1.32 million loss.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In Q2, BIO-key International posted an ROCE of -1.75%.

Keep in mind, while ROCE is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or 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 BIO-key International's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.

Q2 Earnings Recap

BIO-key International reported Q2 earnings per share at $-0.09/share, which did not meet analyst predictions of $-0.03/share.

 

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Posted-In: Earnings News Penny Stocks