Unusual KOSPI moves: what may happen in Korean stocks | Sung Sang-hyun’s Macro Beyond 9-3

An independent exercise, not a statement by the video creator or verification of every claim in the video.

Higher profit can still mean a lower return on capital

Compare hypothetical businesses using the same period and units. After-tax operating profit of 12 on average invested capital of 100 gives a return of 12%. Profit rising to 13 on average capital of 150 yields only 13 ÷ 150 × 100 ≈ 8.7%. Assuming a capital cost of 10% in both cases, profit after the capital charge is 2 and -2 respectively. This is why growth in revenue or profit must be compared with additional capital needs and recovery time. Even with a contract, check collection, maintenance and reinvestment before comparing cash flows.

Check for yourself

1. How much capital was tied up on average to earn the additional profit?
2. What supports today’s high returns after a supply shortage eases?
3. Who retains contractual obligations when demand disappoints, and can payment actually be collected?

Limits of application

100, 12, 12%, 150, 13, 13 ÷ 150 × 100 ≈ 8.7%, 10%, 2 and -2 are assumed values. Average invested capital is simplified as stable within each period; this calculates neither company value nor stock returns. Accounting definitions, taxes, working capital and investment timing change real comparisons.