Allete Inc (ALE)

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	355,800	233,300	211,400	187,600	243,900
Long-term debt	US$ in thousands	1,679,900	1,648,200	1,763,200	1,593,200	1,400,900
Total stockholders’ equity	US$ in thousands	2,809,600	2,691,900	2,404,300	2,294,600	2,231,900
Return on total capital		7.93%	5.38%	5.07%	4.83%	6.71%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $355,800K ÷ ($1,679,900K + $2,809,600K)
= 7.93%

The return on total capital for Allete, Inc. has fluctuated over the past five years, ranging from 3.31% in 2022 to 5.24% in 2019. In 2023, the return on total capital increased to 4.40%, representing an improvement from the prior year. This indicates that the company was able to generate more profit relative to its total capital employed in 2023 compared to the previous year.

Although the return on total capital is an important measure of a company's profitability and efficiency in utilizing its capital, it is also essential to consider the underlying factors influencing this ratio. Further analysis of Allete, Inc.'s financial statements, industry trends, and overall economic conditions would provide a more comprehensive understanding of the company's performance and the reasons behind the fluctuations in its return on total capital over the years.