Automatic Data Processing Inc (ADP)

Return on total capital

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-8,447,200	4,690,900	3,886,000	3,420,900	3,289,700
Long-term debt	US$ in thousands	2,991,300	2,989,000	2,987,100	2,985,000	1,002,800
Total stockholders’ equity	US$ in thousands	4,547,600	3,509,100	3,225,300	5,670,100	5,752,200
Return on total capital		-112.05%	72.19%	62.55%	39.52%	48.70%

June 30, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-8,447,200K ÷ ($2,991,300K + $4,547,600K)
= -112.05%

Automatic Data Processing Inc's return on total capital has fluctuated significantly over the past five years. In 2024, the company reported a negative return on total capital of -112.05%, indicating that its capital utilization led to a loss rather than a profit. This sharp decline from the previous year suggests a significant decrease in the company's ability to generate profits relative to its total capital.

In contrast, in 2023, the return on total capital was at a relatively high level of 72.19%, indicating efficient capital allocation and strong profit generation compared to the invested capital. This level of return was even higher in 2022 at 62.55%, demonstrating a consistently profitable performance.

The trend in return on total capital shows a notable increase from 2019 to 2021, with a peak in 2021 at 39.52%. However, the return declined slightly in 2024. Overall, while the company has demonstrated periods of strong capital efficiency and profit generation, the negative return in 2024 suggests a recent dip in performance that may require further investigation and strategic management.