Alaska Air Group Inc (ALK)
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 | 444,000 | 187,000 | 757,000 | -1,742,000 | 1,094,000 |
| Long-term debt | US$ in thousands | 2,182,000 | 1,883,000 | 2,173,000 | 2,357,000 | 1,264,000 |
| Total stockholders’ equity | US$ in thousands | 4,113,000 | 3,816,000 | 3,801,000 | 2,988,000 | 4,331,000 |
| Return on total capital | 7.05% | 3.28% | 12.67% | -32.59% | 19.55% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $444,000K ÷ ($2,182,000K + $4,113,000K)
= 7.05%
Alaska Air Group Inc.'s return on total capital has shown significant variability over the past five years. In 2023, the return on total capital stood at 12.59%, a moderate increase from the previous year's 10.88%. This improvement indicates that the company was able to generate a higher return on its total capital investment.
The negative returns in 2021 (-3.79%) and 2020 (-26.28%) point to challenges the company faced in those years in generating profits in relation to its overall capital base. The substantial negative return in 2020 particularly stands out as a year of significant underperformance.
However, the return on total capital rebounded strongly in 2019, reaching 18.99%. This suggests that the company was able to efficiently utilize its capital resources to generate profits that year.
Overall, the fluctuations in Alaska Air Group Inc.'s return on total capital reflect the changing dynamics of the aviation industry and the company's ability to manage its capital effectively to generate returns for its investors.
Peer comparison
Dec 31, 2023