Marketingforce Management (HKG:2556) Is Experiencing Growth In Returns On Capital

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. So when we looked at Marketingforce Management (HKG:2556) and its trend of ROCE, we really liked what we saw.

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Understanding Return On Capital Employed (ROCE)

For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on Marketingforce Management is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.0054 = CN¥11m ÷ (CN¥4.7b - CN¥2.7b) (Based on the trailing twelve months to June 2025).

Therefore, Marketingforce Management has an ROCE of 0.5%. Ultimately, that's a low return and it under-performs the Software industry average of 5.9%.

Check out our latest analysis for Marketingforce Management

Above you can see how the current ROCE for Marketingforce Management compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Marketingforce Management for free.

What Does the ROCE Trend For Marketingforce Management Tell Us?

We're delighted to see that Marketingforce Management is reaping rewards from its investments and is now generating some pre-tax profits. Shareholders would no doubt be pleased with this because the business was loss-making three years ago but is is now generating 0.5% on its capital. Not only that, but the company is utilizing 246% more capital than before, but that's to be expected from a company trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

On a related note, the company's ratio of current liabilities to total assets has decreased to 58%, which basically reduces it's funding from the likes of short-term creditors or suppliers. This tells us that Marketingforce Management has grown its returns without a reliance on increasing their current liabilities, which we're very happy with. Nevertheless, there are some potential risks the company is bearing with current liabilities that high, so just keep that in mind.

What We Can Learn From Marketingforce Management's ROCE

To the delight of most shareholders, Marketingforce Management has now broken into profitability. And since the stock has fallen 46% over the last year, there might be an opportunity here. So researching this company further and determining whether or not these trends will continue seems justified.

While Marketingforce Management looks impressive, no company is worth an infinite price. The intrinsic value infographic for 2556 helps visualize whether it is currently trading for a fair price.

While Marketingforce Management may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this free list here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.