Align Technology Inc (ALGN)

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	643,338	642,595	976,400	387,171	542,493
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	3,630,490	3,601,360	3,622,710	3,233,860	1,346,170
Return on total capital		17.72%	17.84%	26.95%	11.97%	40.30%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $643,338K ÷ ($—K + $3,630,490K)
= 17.72%

Return on total capital is a key financial metric that indicates the efficiency of a company in generating profits from its total capital employed. Align Technology, Inc.'s return on total capital has fluctuated over the past five years, ranging from 11.97% in 2020 to 37.66% in 2019.

In 2021, the return on total capital was notably high at 26.95%, indicating the company's ability to generate a strong return relative to its total capital. This suggests efficient utilization of capital resources to generate profits.

The slight decline in the return on total capital in 2022 to 18.16% and further to 18.09% in 2023 may indicate a decrease in the company's profitability relative to its total capital base. However, these figures are still respectable and suggest that Align Technology continues to generate solid returns on its capital investments.

Overall, Align Technology's performance in terms of return on total capital has been generally positive over the past five years, with some fluctuations. It is essential for the company to continue optimizing its capital allocation strategies to maintain and potentially improve its return on total capital in the future.