Smith AO Corporation (AOS)
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 | 745,500 | 233,100 | 629,900 | 451,200 | 483,100 |
| Long-term debt | US$ in thousands | 117,300 | 334,500 | 189,900 | 106,400 | 277,200 |
| Total stockholders’ equity | US$ in thousands | 1,844,400 | 1,747,700 | 1,832,200 | 1,848,300 | 1,666,800 |
| Return on total capital | 38.00% | 11.19% | 31.15% | 23.08% | 24.85% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $745,500K ÷ ($117,300K + $1,844,400K)
= 38.00%
A.O. Smith Corp.'s return on total capital has shown a generally positive trend over the past five years. The ratio has consistently increased from 23.84% in 2019 to 38.41% in 2023, indicating the company's effective utilization of both equity and debt to generate profits.
The company's return on total capital of 38.41% in 2023 represents a significant improvement compared to the previous years, indicating an efficient use of capital to generate returns for shareholders and debt holders. This increase suggests that A.O. Smith Corp. has been able to enhance its profitability and generate higher returns on the total invested capital.
Overall, the trend in return on total capital for A.O. Smith Corp. reflects positively on the company's operational efficiency and financial performance, highlighting its ability to generate strong returns on the capital employed in the business over the years.
Peer comparison
Dec 31, 2023