Analog Devices Inc (ADI)

Return on total capital

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	3,329,282	3,872,653	4,324,997	4,279,956	4,057,569	3,299,158	2,101,892	1,819,703	1,409,961	1,513,539	2,080,988	1,882,994	1,708,989	1,504,922	1,377,621	1,408,107	1,531,159	1,714,803	1,844,639	1,887,381
Long-term debt	US$ in thousands	5,946,670	5,902,460	6,437,650	6,475,650	6,543,250	6,548,620	6,252,840	6,253,220	6,253,580	6,253,210	3,824,820	—	4,747,350	5,145,100	—	—	—	5,192,250	—	—
Total stockholders’ equity	US$ in thousands	35,548,100	35,565,100	35,903,700	36,013,200	36,531,500	36,465,300	36,638,600	37,099,800	37,427,300	37,992,500	12,264,000	12,167,100	12,087,700	11,997,900	11,777,600	11,590,900	11,689,500	11,709,200	11,790,200	11,742,300
Return on total capital		8.02%	9.34%	10.21%	10.07%	9.42%	7.67%	4.90%	4.20%	3.23%	3.42%	12.93%	15.48%	10.15%	8.78%	11.70%	12.15%	13.10%	10.15%	15.65%	16.07%

February 3, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $3,329,282K ÷ ($5,946,670K + $35,548,100K)
= 8.02%

Analog Devices Inc.'s return on total capital has shown a mixed trend over the past eight quarters. The return on total capital ranged from a low of 5.03% in Q2 2022 to a high of 10.40% in Q2 2023. Overall, the return on total capital has been relatively stable, fluctuating within the single-digit to low double-digit range.

The company's return on total capital improved in the most recent quarter, reaching 8.12% in Q1 2024, compared to 9.37% in Q4 2023. This indicates a slight dip in performance in the latest quarter. However, the return is higher than the levels observed in the prior year's quarters, suggesting a positive trend in efficiency and profitability in recent periods.

A return on total capital above the cost of capital indicates that the company is generating excess returns on its invested capital. Analog Devices Inc. should continue to monitor and potentially improve its return on total capital to ensure efficient utilization of its capital resources and to maximize shareholder wealth in the long term.