There has been no shortage of growth lately for Byte Computer’s (ATH: BYTE) capital return

If you’re not sure where to start when looking for your next multipack packing machine, there are a few key trends to watch out for. In an ideal world, we would like to see a company investing more capital in its business and ideally the returns on that capital also increasing. Essentially, this means that the company has profitable initiatives that it can continue to reinvest in, which is a feature of the installation machine. So when we looked at computer byte (ATH: BYTE) And its trend at ROCE, we really liked what we saw.

Understanding Return on Capital Employed (ROCE)

For those who don’t know, ROCE is a measure of a company’s annual pre-tax earnings (its return), relative to the capital employed in the business. Analysts use this formula to calculate Byte Computer:

Return on capital employed = EBIT ÷ (Total Assets – Current Liabilities)

0.19 = 3.5 million euros (32 million euros – 14 million euros) (Based on the subsequent twelve months to June 2021).

And therefore, Byte Computer has a ROCE of 19%. In absolute terms, this is a satisfactory return, but compared to the IT industry average of 14% it is much better.

View our latest analysis for Byte Computer

ATSE: BYTE Return on Capital Employed on November 27, 2021

While the past doesn’t represent the future, it can be helpful to see how the company has performed historically, which is why we have this chart above. If you want to take a look at Byte Computer’s past performance in other metrics, you can view this Free Graph of past earnings, revenue and cash flow.

So how is Byte Computer’s ROCE directed?

Shareholders will be relieved that Byte Computer has broken into profitability. While the business was unprofitable in the past, now it has turned things around and is making a profit of 19% of its capital. While returns increased, the amount of capital that Byte Computer used remained constant during the period. With no significant increase in capital employed, it is worth knowing what the company plans to do going forward in terms of reinvestment and business growth. Because in the end, the company can become very efficient.

On a separate but related note, it is important to know that Byte Computer has current liabilities to total assets of 42%, which we consider very high. This can lead to some risks because the company is primarily operating with a fairly heavy reliance on its suppliers or other types of short-term creditors. Ideally, we would like to see this decrease because that would mean less risk taking obligations.

Bottom Line on ROCE for PC Byte

To sum it up, Byte Computer collects higher returns for the same amount of capital, which is quite impressive. The observed total return of 807% over the past five years tells us that investors expect more good things in the future. In light of that, we think it’s worth looking more into this stock because if Byte Computer can maintain these trends, it may have a bright future ahead.

However, Byte Computer has some risks, and we’ve spotted them 1 warning sign for Byte Computer which you may be interested in.

While Byte Computer does not generate the highest return, check this out Free List of companies that achieve high returns on equity with strong balance sheets.

This article by Simply Wall St is general in nature. We provide comments based only on historical data and analyst expectations 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, nor does it take into account your objectives or financial situation. We aim to provide you with focused, long-term analysis driven by essential data. Note that our analysis may not include the company’s most recent price-sensitive ads or quality materials. Wall Street simply has no position in any of the stocks mentioned.

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