Amazon.com (NASDAQ: AMZN) posted a 16.53% decrease in earnings from Q1. Sales, however, increased by 17.84% over the previous quarter to $88.91 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Amazon.com is not utilizing their capital as effectively as possible. Amazon.com earned $4.05 billion and saw $75.45 billion in sales in Q1.Why ROCE Is Significant Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed in a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth in a company and is a sign of higher earnings per share for shareholders in the future. A low or negative ROCE suggests the opposite. In Q2, Amazon.com posted an ROCE of 0.03%.View more earnings on AMZNKeep in mind, while ROCE is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or 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 Amazon.com's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.Q2 Earnings Amazon.com reported Q2 earnings per share at $10.30/share against analyst predictions of $1.46/share.See more from Benzinga * Morning Market Stats in 5 Minutes * Earnings Scheduled For July 30, 2020 * A Preview Of Amazon.com's Earnings(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved. Read More...
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Amazon.com (NASDAQ:
AMZN) posted a 16.53% decrease in earnings from Q1. Sales, however, increased by 17.84% over the previous quarter to $88.91 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Amazon.com is not utilizing their capital as effectively as possible. Amazon.com earned $4.05 billion and saw $75.45 billion in sales in Q1.” data-reactid=”12″>
Amazon.com (NASDAQ:
AMZN) posted a 16.53% decrease in earnings from Q1. Sales, however, increased by 17.84% over the previous quarter to $88.91 billion. Despite the increase in sales this quarter, the decrease in earnings may suggest Amazon.com is not utilizing their capital as effectively as possible. Amazon.com earned $4.05 billion and saw $75.45 billion in sales in Q1.
Why ROCE Is Significant
Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed in a business. Changes in earnings and sales indicate shifts in a company’s ROCE. A higher ROCE is generally representative of successful growth in a company and is a sign of higher earnings per share for shareholders in the future. A low or negative ROCE suggests the opposite. In Q2, Amazon.com posted an ROCE of 0.03%.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="View more earnings on AMZN” data-reactid=”15″>View more earnings on AMZN
Keep in mind, while ROCE is a good measure of a company’s recent performance, it is not a highly reliable predictor of a company’s earnings or 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 Amazon.com’s case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.
Q2 Earnings
Amazon.com reported Q2 earnings per share at $10.30/share against analyst predictions of $1.46/share.
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