Why roce is low

Think of it as a tool for spotting companies that can squeeze a high a return out of the capital they put into their businesses. ROCE is especially important for capital-intensive companies. Top performers are the firms that deliver above-average returns over a period of several years and ROCE can help you to spot them.

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Related Articles. ROI: What's the difference? ROA: What's the Difference? Partner Links. Learn What Capital Employed Is Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits. Why the Interest Coverage Ratio Matters The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt. Understanding Return on Average Capital Employed Return on average capital employed ROACE is a financial ratio that shows profitability versus the investments a company has made in itself.

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View mytutor2u. In absolute terms, that's a low return and it also under-performs the Electronic industry average of 9. See our latest analysis for Vishay Precision Group. Above you can see how the current ROCE for Vishay Precision Group compares to its prior returns on capital, but there's only so much you can tell from the past.

If you'd like to see what analysts are forecasting going forward, you should check out our free report for Vishay Precision Group. Even though ROCE is still low in absolute terms, it's good to see it's heading in the right direction. The data shows that returns on capital have increased substantially over the last five years to 7. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

A company that is growing its returns on capital and can consistently reinvest in itself is a highly sought after trait, and that's what Vishay Precision Group has. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. Therefore, we think it would be worth your time to check if these trends are going to continue. One more thing to note, we've identified 1 warning sign with Vishay Precision Group and understanding this should be part of your investment process.

For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.

It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data.

Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article?

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