The AES Corporation (AES)
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 | 1,829,000 | 836,000 | 369,000 | 1,300,000 | 1,705,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,488,000 | 2,437,000 | 2,798,000 | 2,634,000 | 2,996,000 |
| Return on total capital | 73.51% | 34.30% | 13.19% | 49.35% | 56.91% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,829,000K ÷ ($—K + $2,488,000K)
= 73.51%
AES Corp.'s return on total capital has shown some fluctuation over the past five years. In 2023, the return on total capital was 7.55%, a slight decrease from the previous year's 8.75%. This decline may indicate a potential decrease in the company's ability to generate returns on its total invested capital.
Comparing to 2021, where the return on total capital was at its peak at 11.73%, the current return of 7.55% appears significantly lower, signaling a possible decline in the company's overall efficiency in utilizing its total capital to generate profits.
Although AES Corp. experienced a slight drop in return on total capital in 2023, it is important to note that the company's performance in this aspect has generally been positive over the past five years, with returns consistently above 7.55%.
Further analysis would be required to understand the factors contributing to the fluctuations in AES Corp.'s return on total capital and to assess the company's overall financial health and performance.