Finding a business with significant growth potential isn't easy, but it's possible if you focus on a few key financial metrics. Ideally, your business will see two trends.grow first return One is capital employed (ROCE) and the second is increasing. amount of capital employed. If you see this, it usually means the company has a good business model and plenty of opportunities for profitable reinvestment. So when we looked through, Apaq technology (TWSE:6449) Trends in ROCE, we like what we see.
What is return on capital employed (ROCE)?
For those who aren't sure what ROCE is, it measures the amount of pre-tax profit a company can generate from the capital employed in its business. To calculate this metric for Apaq technology, use the following formula:
Return on Capital Employed = Earnings before interest and tax (EBIT) ÷ (Total assets – Current liabilities)
0.12 = NT$377 million ÷ (NT$4.9 billion – NT$1.7 billion) (Based on the previous 12 months to December 2023).
therefore, Apaq Technology's ROCE is 12%. While this is a standard return in itself, it is much better than the 7.3% produced by the electronics industry.
Check out our latest analysis for Apaq Technology.
Although the past does not represent the future, it can be helpful to know how a company has performed historically. That's why I created this graph above. If you are interested in delving further into Apaq Technology's past, check out this free A graph covering Apaq Technology's historical earnings, revenue and cash flow.
What are the return trends like?
Current return on capital is decent, but hasn't changed much. Over the past five years, the ROCE has been relatively flat at around 12%, and he has deployed 48% more capital in operating the business. However, 12% is a middling ROCE for him, so it's good that the company can continue to reinvest at such a decent rate of return. Over the long term, such returns may not be as attractive, but if they are consistent, they can pay off in terms of stock return.
Apaq Technology's ROCE highlights
The main thing to remember is that Apaq Technology has demonstrated the ability to continually reinvest at substantial rates of return. On top of that, the stock has returned an impressive 203% to shareholders over the past five years. So even if this stock is now more “expensive” than it was before, we believe its strong fundamentals make this stock worthy of further research.
If you want to continue researching Apaq technology, 1 warning sign What our analysis revealed.
Apaq Technology isn't the highest earner, but check this out. free A list of companies with solid balance sheets and high return on equity.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
