Return On Capital Employed Overview: National CineMedia

National CineMedia NCMI reported Q4 sales of $15.70 million. Earnings fell to a loss of $20.80 million, resulting in a 2.35% decrease from last quarter. In Q3, National CineMedia brought in $6.00 million in sales but lost $21.30 million in earnings.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in National CineMedia'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 Q4, National CineMedia posted an ROCE of 0.08%.

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows National CineMedia is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will generally lead to higher returns and earnings per share growth.

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

Q4 Earnings Recap

National CineMedia reported Q4 earnings per share at $-0.62/share, which did not meet analyst predictions of $-0.18/share.