Benzinga | Aug 16, 2021 10:42AM EDT

Return on Capital Employed Insights for Take-Two Interactive

Pulled from Benzinga Pro data Take-Two Interactive (NASDAQ:TTWO) posted Q1 earnings of $170.47 million, an increase from Q4 of 33.36%. Sales dropped to $711.43 million, a 9.32% decrease between quarters. In Q4, Take-Two Interactive earned $255.82 million, and total sales reached $784.53 million.

Why ROCE Is Significant

Changes in earnings and sales indicate shifts in Take-Two Interactive'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, Take-Two Interactive posted an ROCE of 0.05%.

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 Take-Two Interactive's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Analyst Predictions

Take-Two Interactive reported Q1 earnings per share at $1.01/share, which beat analyst predictions of $0.89/share.