During Q2, Evofem Biosciences's (NASDAQ: EVFM) reported sales totaled $0.00. Despite a 16.25% in earnings, the company posted a loss of $22.37 million. Evofem Biosciences collected $0.00 in revenue during Q1, but reported earnings showed a $19.24 million loss.
Why ROCE Is Significant
Changes in earnings and sales indicate shifts in Evofem Biosciences’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future. In Q2, Evofem Biosciences posted an ROCE of -0.33%.
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 Evofem Biosciences's case, the ROCE ratio shows the amount of assets may not be helping the company achieve higher returns. Investors may take this into account before making any long-term financial decisions.
Q2 Earnings Recap
Evofem Biosciences reported Q2 earnings per share at $-0.39/share, which did not meet analyst predictions of $-0.37/share.
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