Returns At HWASHINLtd (KRX:010690) Are On The Way Up

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. So on that note, HWASHINLtd (KRX:010690) looks quite promising in regards to its trends of return on capital.

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Return On Capital Employed (ROCE): What Is It?

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 HWASHINLtd is:

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

0.10 = ₩75b ÷ (₩1.4t - ₩721b) (Based on the trailing twelve months to March 2025).

Therefore, HWASHINLtd has an ROCE of 10%. On its own, that's a standard return, however it's much better than the 7.9% generated by the Auto Components industry.

View our latest analysis for HWASHINLtd

In the above chart we have measured HWASHINLtd's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering HWASHINLtd for free.

The Trend Of ROCE

We're delighted to see that HWASHINLtd is reaping rewards from its investments and is now generating some pre-tax profits. About five years ago the company was generating losses but things have turned around because it's now earning 10% on its capital. In addition to that, HWASHINLtd is employing 70% more capital than previously which is expected of a company that's trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

Another thing to note, HWASHINLtd has a high ratio of current liabilities to total assets of 50%. This can bring about some risks because the company is basically operating with a rather large reliance on its suppliers or other sorts of short-term creditors. Ideally we'd like to see this reduce as that would mean fewer obligations bearing risks.

What We Can Learn From HWASHINLtd's ROCE

Overall, HWASHINLtd gets a big tick from us thanks in most part to the fact that it is now profitable and is reinvesting in its business. And a remarkable 260% total return over the last five years tells us that investors are expecting more good things to come in the future. In light of that, we think it's worth looking further into this stock because if HWASHINLtd can keep these trends up, it could have a bright future ahead.

On a final note, we've found 2 warning signs for HWASHINLtd that we think you should be aware of.

While HWASHINLtd 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.