Since the third quarter, General Mills (NYSE:GIS) has lost $448.30 million in earnings. During the fourth quarter, sales climbed by 0.09 percent to $4.52 billion. In the third quarter, General Mills earned $860.00 million on sales of $4.52 billion.
What is the definition of Return On Capital Employed (ROCE)?
Return on Capital Employed (ROCE) is a metric that compares a company’s annual pre-tax profit to the capital it has invested. Earnings and sales fluctuations imply changes in a company’s ROCE. A higher ROCE is indicative of a company’s successful growth and, as a result, of better earnings per share in the future. A low or negative ROCE indicates the inverse. General Mills had a ROCE of 0.04 percent in the fourth quarter.
Keep in mind that, while ROCE is a solid indicator of a company’s previous performance, it isn’t a very good prediction of earnings or sales in the near future.
Return on Capital Employed (ROCE) is a key indicator of efficiency and a useful metric for comparing businesses in the same industry. A high ROCE shows that a company is making profits that can be reinvested into new capital, resulting in higher returns and EPS growth for shareholders.
In the instance of General Mills, the positive ROCE ratio will be a factor to consider when making long-term financial decisions.
Recap of Q4 Earnings
General Mills reported $0.91 earnings per share in the fourth quarter, beating analyst expectations of $0.84./n
