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Do Solaria Energía y Medio Ambiente, S.A.'s (BME:SLR) Returns On Capital Employed Make The Cut?


Added 07-10-19 02:04:02am EST - “Today we are going to look at Solaria Energ” - News.yahoo.com

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Posted By TheNewsCommenter: From News.yahoo.com: “Do Solaria Energía y Medio Ambiente, S.A.’s (BME:SLR) Returns On Capital Employed Make The Cut?”. Below is an excerpt from the article.

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Today we are going to look at Solaria Energía y Medio Ambiente, S.A. (BME:SLR) to see whether it might be an attractive investment prospect. In particular, we'll consider its Return On Capital Employed (ROCE), as that can give us insight into how profitably the company is able to employ capital in its business.

Firstly, we'll go over how we calculate ROCE. Then we'll compare its ROCE to similar companies. Last but not least, we'll look at what impact its current liabilities have on its ROCE.

ROCE measures the amount of pre-tax profits a company can generate from the capital employed in its business. Generally speaking a higher ROCE is better. Ultimately, it is a useful but imperfect metric. Author Edwin Whiting says to be careful when comparing the ROCE of different businesses, since 'No two businesses are exactly alike.'

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

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