ABM Industries Incorporated (ABM)
Return on total capital
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 413,300 | 351,100 | 208,400 | 98,000 | 211,200 |
| Long-term debt | US$ in thousands | 1,279,800 | 1,086,300 | 852,800 | 603,000 | 744,200 |
| Total stockholders’ equity | US$ in thousands | 1,799,900 | 1,717,200 | 1,609,200 | 1,500,300 | 1,542,000 |
| Return on total capital | 13.42% | 12.52% | 8.46% | 4.66% | 9.24% |
October 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $413,300K ÷ ($1,279,800K + $1,799,900K)
= 13.42%
ABM Industries Inc.'s return on total capital has shown positive performance over the past five years, as depicted by the consistently positive percentages for each year. The return on total capital increased from 9.50% in 2019 to 13.29% in 2023, reflecting an upward trend in the company's ability to generate returns from its total capital.
The return on total capital for 2023 was 13.29%, indicating that for every dollar of total capital employed in the business, ABM Industries Inc. generated a return of 13.29 cents. This suggests efficient utilization of both debt and equity in creating value for the company's stakeholders.
The fluctuation in the return on total capital over the years, with the percentage ranging from 8.35% to 13.29%, may be attributed to changes in the company's capital structure, investment decisions, or operational performance. It is noteworthy that the return on total capital exceeded 10% in all years, indicating that the company consistently earned a return exceeding the cost of capital, which is a positive sign for investors and lenders.
Overall, the consistently positive and increasing trend in ABM Industries Inc.'s return on total capital suggests effective capital allocation and operational management, providing confidence in the company's ability to generate returns for its investors and creditors.
Peer comparison
Oct 31, 2023