While Electronic Arts doesn't shine too bright in this respect, it's still worth seeing if the company is trading at attractive prices. See our latest analysis for Electronic Arts On its own, that's a standard return, however it's much better than the 6.9% generated by the Entertainment industry. Therefore, Electronic Arts has an ROCE of 12%. Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)Ġ.12 = US$1.2b ÷ (US$14b - US$3.5b) (Based on the trailing twelve months to March 2022). Analysts use this formula to calculate it for Electronic Arts: If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Return On Capital Employed (ROCE): What is it? However, after briefly looking over the numbers, we don't think Electronic Arts ( NASDAQ:EA) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. ![]() Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed.
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