Applied Industrial Technologies (AIT)
Return on total capital
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 501,579 | 499,991 | 467,316 | 357,248 | 219,422 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,844,520 | 1,688,780 | 1,458,440 | 1,149,360 | 932,546 |
| Return on total capital | 27.19% | 29.61% | 32.04% | 31.08% | 23.53% |
June 30, 2025 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $501,579K ÷ ($—K + $1,844,520K)
= 27.19%
The analysis of Applied Industrial Technologies' return on total capital over the specified period demonstrates noteworthy fluctuations and a general upward trend followed by a slight decline. On June 30, 2021, the return on total capital was 23.53%, indicating the company's ability to generate earnings from its overall capital base was relatively moderate at that time. By June 30, 2022, this figure increased significantly to 31.08%, reflecting improved efficiency in utilizing total capital to generate profit. The upward trajectory continued into June 30, 2023, with a marginal increase to 32.04%, reaching the highest point within the analyzed timeframe, which suggests optimal performance in leveraging total capital.
However, the subsequent year experienced a decrease, with the return dropping to 29.61% by June 30, 2024. Although still relatively strong, this decline indicates a potential reduction in capital efficiency or increased capital costs. The trend persisted into June 30, 2025, with the return further declining to 27.19%. This gradual decrease after reaching the peak in 2023 could signal emerging challenges in maintaining previous levels of profitability derived from the total capital base.
Overall, the company's return on total capital shows an initial sharp increase, achieving a peak in 2023, followed by a tapering off that suggests a slight deterioration in the efficiency of capital utilization. This pattern underscores the importance of monitoring operational factors and capital management strategies moving forward to sustain or improve the company's profitability relative to its total capital.