Advance Auto Parts Inc (AAP)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 114,377 | 714,151 | 838,717 | 749,907 | 677,180 |
| Long-term debt | US$ in thousands | 1,786,360 | 1,188,280 | 1,034,320 | 1,032,980 | 747,320 |
| Total stockholders’ equity | US$ in thousands | 2,519,730 | 2,599,190 | 3,129,450 | 3,559,510 | 3,549,080 |
| Return on total capital | 2.66% | 18.86% | 20.14% | 16.33% | 15.76% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $114,377K ÷ ($1,786,360K + $2,519,730K)
= 2.66%
The return on total capital for Advance Auto Parts Inc has shown significant fluctuations over the five-year period. In 2021, the company achieved a high return on total capital of 20.14%. However, this figure decreased to 16.33% in 2020 before slightly increasing to 18.86% in 2022. In the most recent year, 2023, the return on total capital dropped to 2.66%.
The decreasing trend in return on total capital from 2021 to 2023 suggests a potential decline in the company's efficiency in generating profits relative to its total capital employed. This could be attributed to various factors such as changes in the company's operating efficiency, cost structure, or capital allocation strategies.
It is important for investors and stakeholders to closely monitor the return on total capital metric, as it provides insights into the company's overall profitability and capital management efficiency. Further analysis and investigation into the underlying reasons for the fluctuating returns will be essential in understanding the company's financial performance and future prospects.
Peer comparison
Dec 31, 2023