Smith AO Corporation (AOS)
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 | 707,700 | 745,500 | 233,100 | 629,900 | 451,200 |
| Long-term debt | US$ in thousands | 183,200 | 117,300 | 334,500 | 189,900 | 106,400 |
| Total stockholders’ equity | US$ in thousands | 1,883,500 | 1,844,400 | 1,747,700 | 1,832,200 | 1,848,300 |
| Return on total capital | 34.24% | 38.00% | 11.19% | 31.15% | 23.08% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $707,700K ÷ ($183,200K + $1,883,500K)
= 34.24%
Smith AO Corporation's return on total capital has shown significant fluctuations over the past five years. The ratio increased from 23.08% as of December 31, 2020, to 31.15% by December 31, 2021, indicating an improvement in the company's efficiency in generating returns from its total capital.
However, there was a notable decline to 11.19% by December 31, 2022, which could suggest potential challenges or inefficiencies in the utilization of capital during that period.
The return on total capital rebounded strongly to 38.00% by December 31, 2023, signaling a rapid and substantial improvement in the company's capital management and profitability. Subsequently, by December 31, 2024, the ratio remained healthy at 34.24%, showing continued strong performance in generating returns relative to the total capital employed.
Overall, these fluctuations in return on total capital reflect varying levels of effectiveness in utilizing the company's capital resources to generate profits, with notable improvements and some periods of relative underperformance. Analysis of the underlying factors driving these fluctuations would be necessary to assess the sustainability and strategies for enhancing the company's overall financial performance.
Peer comparison
Dec 31, 2024