Telefonaktiebolaget L M Ericsson (OSTO:ERIC A) ROCE % : 16.45% (As of Sep. 2024)

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What is Telefonaktiebolaget L M Ericsson ROCE %?

ROCE % measures how well a company generates profits from its capital. It is calculated as EBIT divided by Capital Employed, where Capital Employed is calculated as Total Assets minus Total Current Liabilities. Telefonaktiebolaget L M Ericsson's annualized ROCE % for the quarter that ended in Sep. 2024 was 16.45%.

Telefonaktiebolaget L M Ericsson ROCE % Historical Data

The historical data trend for Telefonaktiebolaget L M Ericsson's ROCE % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Telefonaktiebolaget L M Ericsson ROCE % Chart

Telefonaktiebolaget L M Ericsson Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROCE %

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6.64

18.21

18.14

13.80

-10.80

Telefonaktiebolaget L M Ericsson Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
ROCE %	Get a 7-Day Free Trial															-64.35	13.05	11.03	-31.51	16.45

Telefonaktiebolaget L M Ericsson ROCE % Calculation

Telefonaktiebolaget L M Ericsson's annualized ROCE % for the fiscal year that ended in Dec. 2023 is calculated as:

ROCE %	=	EBIT	/	( (Capital Employed	+	Capital Employed)	/ count )
		(A: Dec. 2023 )		(A: Dec. 2022 )		(A: Dec. 2023 )
	=	EBIT	/	( ( (Total Assets - Total Current Liabilities)	+	(Total Assets - Total Current Liabilities) )	/ count )
		(A: Dec. 2023 )		(A: Dec. 2022 )		(A: Dec. 2023 )
	=	-20056	/	( ( (349537 - 145620)	+	(297036 - 129399) )	/ 2 )
	=	-20056	/	( (203917	+	167637)	/ 2 )
	=	-20056	/	185777
	=	-10.80 %

Telefonaktiebolaget L M Ericsson's ROCE % of for the quarter that ended in Sep. 2024 is calculated as:

ROCE %	=	EBIT ⁽¹⁾	/	( (Capital Employed	+	Capital Employed)	/ count )
		(Q: Sep. 2024 )		(Q: Jun. 2024 )		(Q: Sep. 2024 )
	=	EBIT	/	( ( (Total Assets - Total Current Liabilities)	+	(Total Assets - Total Current Liabilities) )	/ count )
		(Q: Sep. 2024 )		(Q: Jun. 2024 )		(Q: Sep. 2024 )
	=	25056	/	( ( (278486 - 127459)	+	(272450 - 118891) )	/ 2 )
	=	25056	/	( ( 151027	+	153559 )	/ 2 )
	=	25056	/	152293
	=	16.45 %

(1) Note: The EBIT data used here is four times the quarterly (Sep. 2024) EBIT data.

Telefonaktiebolaget L M Ericsson (OSTO:ERIC A) ROCE % Explanation

ROCE % can be especially useful when comparing the performance of capital-intensive companies. Unlike ROE %, which indicates the profitability of Shareholders Equity, ROCE % also considers long-term debt in Capital Employed. This can be helpful when analyzing companies with significant debt, as the result is neutralized by taking debt into consideration.

Generally speaking, a higher ROCE % indicates a stonger profitability for a company. Moreover, it is important to look at the ratio from a long term perspective. Investors tend to favor companies with stable and rising ROCE % trend over those with volatile ones.

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Telefonaktiebolaget L M Ericsson Business Description

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Address

Torshamnsgatan 21, Kista, Stockholm, SWE, SE-164 83

Website

https://www.ericsson.com

Ericsson provides telecom equipment and services that are primarily used to build and facilitate mobile networks through operations in three segments: networks, cloud and software services, and enterprises. The firm's customers have historically been primarily wireless carriers, but the firm is making a push to cater more to other enterprises as well, both as they try to take advantage of 5G capabilities and on other "as-a-service" communications platforms. The company also licenses its patents to handset manufacturers so their devices are compatible with wireless networks.

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