Benzinga | Jul 16, 2021 03:02PM EDT

Return on Capital Employed Overview: Korn Ferry

After pulling data from Benzinga Pro it seems like during Q4, Korn Ferry (NYSE:KFY) earned $86.25 million, a 32.38% increase from the preceding quarter. Korn Ferry also posted a total of $557.39 million in sales, a 16.64% increase since Q3. In Q3, Korn Ferry earned $65.16 million, and total sales reached $477.88 million.

Why ROCE Is Significant

Return on Capital Employed is a measure of yearly pre-tax profit relative to capital employed by a business. Changes in earnings and sales indicate shifts in a company's ROCE. A higher ROCE is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROCE suggests the opposite. In Q4, Korn Ferry posted an ROCE of 0.06%.

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.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Korn Ferry 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 Korn Ferry's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Upcoming Earnings Estimate

Korn Ferry reported Q4 earnings per share at $1.21/share, which beat analyst predictions of $0.98/share.