Return On Capital Employed Overview: Callaway Golf

Callaway Golf ELY posted a 335.93% decrease in earnings from Q4. Sales, however, increased by 73.94% over the previous quarter to $651.62 million. Despite the increase in sales this quarter, the decrease in earnings may suggest Callaway Golf is not utilizing their capital as effectively as possible. In Q4, Callaway Golf brought in $374.63 million in sales but lost $32.26 million in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Callaway Golf's Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed by a business. Generally, a higher ROCE suggests successful growth of a company and is a sign of higher earnings per share in the future. In Q1, Callaway Golf posted an ROCE of 0.02%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

Return on Capital Employed is an important measurement of efficiency and a useful tool when comparing companies that operate in the same industry. A relatively high ROCE indicates a company may be generating profits that can be reinvested into more capital, leading to higher returns and growing EPS for shareholders.

In Callaway Golf's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q1 Earnings Insight

Callaway Golf reported Q1 earnings per share at $0.62/share, which beat analyst predictions of $0.14/share.