Akamai Technologies Inc (AKAM)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 533,411 | 671,711 | 661,464 | 786,545 | 672,096 |
| Long-term debt | US$ in thousands | 2,396,700 | 3,538,230 | 2,285,260 | 1,976,170 | 1,906,710 |
| Total stockholders’ equity | US$ in thousands | 4,878,360 | 4,597,160 | 4,360,190 | 4,530,010 | 4,251,300 |
| Return on total capital | 7.33% | 8.26% | 9.95% | 12.09% | 10.91% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $533,411K ÷ ($2,396,700K + $4,878,360K)
= 7.33%
Akamai Technologies Inc's return on total capital has fluctuated over the years based on the provided data. In December 31, 2020, the return on total capital was 10.91%, showing a relatively solid performance. This percentage increased to 12.09% by December 31, 2021, indicating improved efficiency in generating profits relative to its total capital.
However, in the subsequent years, Akamai's return on total capital experienced a decline. By December 31, 2022, the return on total capital decreased to 9.95%, suggesting potentially lower profitability or less effective utilization of capital. This trend continued as the return on total capital further decreased to 8.26% by December 31, 2023, and then dropped to 7.33% by December 31, 2024.
The declining trend in return on total capital from 2022 to 2024 may indicate challenges in efficiently employing the company's total capital to generate returns for its shareholders. Akamai may need to assess its capital allocation strategies, operational efficiencies, and overall financial performance to address this declining trend and work towards improving its return on total capital in the future.
Peer comparison
Dec 31, 2024