Overview of Asensus Surgical’s Return on Capital Employed – Asensus Surgical (AMEX:ASXC)
Benzinga Pro Data, Asensus surgery ASXC reported second-quarter sales of $994,000. Profit fell to a loss of $19.62 million, dragging down 2.57% from last quarter. In the first quarter, Asensus Surgical made $1.07 million in sales but lost $19.13 million in revenue.
What is return on capital employed?
Return on capital employed is a measure of annual pre-tax profit relative to the capital employed by a business. Changes in profits and sales indicate changes in a company’s ROCE. A higher ROCE is generally indicative of a company’s successful growth and is a sign of higher earnings per share in the future. A low or negative ROCE suggests otherwise. In Q2, Asensus Surgical posted a ROCE of -0.15%.
Keep in mind that while ROCE is a good measure of a company’s recent performance, it’s not a very reliable indicator of a company’s earnings or sales in the near future.
ROCE is a powerful metric for comparing the efficiency of capital allocation for similar companies. A relatively high ROCE shows that Asensus Surgical is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital, which will generally lead to higher returns and ultimately growth in earnings per share ( EPS).
For Asensus Surgical, a negative ROCE ratio of -0.15% suggests management may not be allocating capital efficiently. Efficient capital allocation is a positive indicator that a company will achieve more sustainable success and favorable long-term returns; poor capital allocation can hurt a company’s performance over time.
Asensus Surgical reported second-quarter earnings per share at -$0.07/share, beating analysts’ forecast of -$0.08/share.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.