Advanced Micro Devices Inc (AMD)
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 | 2,114,000 | 614,000 | 1,286,000 | 3,709,000 | 1,327,000 |
| Long-term debt | US$ in thousands | 1,721,000 | 1,717,000 | 2,467,000 | 1,000 | 330,000 |
| Total stockholders’ equity | US$ in thousands | 57,568,000 | 55,892,000 | 54,750,000 | 7,497,000 | 5,837,000 |
| Return on total capital | 3.57% | 1.07% | 2.25% | 49.47% | 21.52% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,114,000K ÷ ($1,721,000K + $57,568,000K)
= 3.57%
The Return on Total Capital of Advanced Micro Devices Inc has shown significant fluctuations over the past five years. In December 2020, the company achieved a return of 21.52%, indicating efficient utilization of both equity and debt capital to generate profits. By December 2021, AMD's return on total capital surged to 49.47%, reflecting a substantial improvement in capital efficiency.
However, the performance dipped sharply by December 2022, with the return declining to 2.25%. This significant decrease in return signals potential issues with the company's capital allocation strategies or operational effectiveness. The trend continued into December 2023, where the return on total capital further dropped to 1.07%, indicating continued challenges in generating satisfactory returns on the total invested capital.
Luckily, by December 2024, there was a slight recovery, with the return on total capital improving to 3.57%. Although this represents a positive movement from the previous year, the return remains significantly lower than the peak in 2021. Overall, the fluctuating trend in AMD's return on total capital suggests the need for a closer examination of the company's capital allocation decisions and operational efficiencies to enhance long-term profitability.
Peer comparison
Dec 31, 2024