1. Net Working Capital (NWC)
NWC is the lifeblood of a business, representing its short-term operational liquidity. A positive NWC ensures a company can fund its operations and meet short-term obligations.
Current NWC Position
$1.2M
A healthy buffer to cover short-term liabilities, indicating strong financial health and operational flexibility.
NWC Component Breakdown
This chart illustrates the composition of Net Working Capital, comparing current assets to current liabilities. The larger the asset portion, the stronger the liquidity.
2. Capital Employed
This metric reveals the total capital used to generate profits. Tracking its efficiency through ROCE is crucial for understanding long-term value creation.
Return on Capital Employed (ROCE)
18.5%
For every dollar of capital employed, the company generates 18.5 cents in profit, showcasing efficient use of its funding base.
Capital vs. Revenue Growth
An ideal trend shows revenue growing faster than the capital employed, indicating increasing operational efficiency over time.
3. Invested Capital
Invested Capital is the total funding from both debt and equity holders. Analyzing its structure and return (ROIC) is key to balancing risk and maximizing shareholder value.
Invested Capital Mix (Debt vs. Equity)
This chart shows the evolution of the company’s capital structure. A balanced mix is often sought to optimize the cost of capital.
ROIC vs. Industry Benchmark
Comparing ROIC and its drivers against the industry average highlights competitive strengths and areas for improvement.
4. Equity
Equity represents shareholders’ stake. Return on Equity (ROE) measures profitability relative to shareholder investment, a primary concern for investors.
Growth of Shareholder Equity
This chart shows how shareholder equity has grown over time, fueled by both initial investments and the reinvestment of profits (retained earnings).
Return on Equity (ROE)
22.1%
The company generates 22.1 cents of profit for every dollar of equity, signaling strong returns for its shareholders.
A Roadmap to Improvement
Improving capital management is a continuous cycle of analysis and action. The following steps outline key strategies to enhance financial performance across all four areas.
Optimize NWC
- Reduce Inventory
- Accelerate Collections
- Extend Payables
Boost ROCE
- Maximize Asset Use
- Cut Inefficiencies
- Improve Profitability
Enhance ROIC
- Find Optimal Debt/Equity Mix
- Make Smart Investments
Increase ROE
- Drive Profit Growth
- Judicious Capital Raising