Alpha and Omega Semiconductor Ltd (AOSL)

Return on total capital

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	-28,436	-3,756	22,529	102,038	64,076
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	822,332	891,607	883,919	854,093	373,205
Return on total capital		-3.46%	-0.42%	2.55%	11.95%	17.17%

June 30, 2025 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-28,436K ÷ ($—K + $822,332K)
= -3.46%

The analysis of Alpha and Omega Semiconductor Ltd’s return on total capital over the period from June 30, 2021, to June 30, 2025, reveals a pronounced declining trend. The return on total capital was 17.17% as of June 30, 2021, indicating a relatively high level of efficiency in generating profit from its capital base. By June 30, 2022, this measure had decreased to 11.95%, reflecting a decline in the company's ability to generate returns relative to its total capital, though it still maintained a positive profitability margin.

The downward trajectory continued significantly by June 30, 2023, with the return falling to just 2.55%. This sharp reduction suggests that the company's operational efficiency or profitability from its total capital had deteriorated considerably over this period. The decline persisted into June 30, 2024, with the return turning negative at -0.42%, indicating the company was no longer generating a return on its total capital and might have been experiencing losses or extremely low profit margins.

By June 30, 2025, the return on total capital further declined to -3.46%, accentuating the persistent deterioration in profitability relative to the total capital employed. This negative value emphasizes ongoing challenges in generating adequate returns from the company's capital base, potentially signaling financial distress or fundamental operational issues.

Overall, the trend demonstrates a significant erosion of profitability and efficiency in capital utilization over the four-year period. The transition from robust positive returns to negative territory highlights areas of concern regarding the company's operational performance, capital management, or external market conditions affecting its ability to generate sustainable returns on total capital.