Avista Corporation (AVA)

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	257,690	190,242	228,232	232,700	331,365
Long-term debt	US$ in thousands	1,100,000	2,281,010	1,898,370	2,008,530	1,843,770
Total stockholders’ equity	US$ in thousands	2,485,320	2,334,670	2,154,740	2,029,730	1,939,280
Return on total capital		7.19%	4.12%	5.63%	5.76%	8.76%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $257,690K ÷ ($1,100,000K + $2,485,320K)
= 7.19%

The return on total capital for Avista Corp. has exhibited some fluctuations over the past five years. From 2019 to 2023, the return on total capital decreased from 5.58% to 4.72%, with a slight increase in 2021 to 4.87%, before decreasing again in 2022 to 3.67%. This indicates that the company may be facing challenges in generating returns on the total capital employed in its operations.

The declining trend in return on total capital suggests that Avista Corp. may need to focus on improving its efficiency in utilizing its total capital to generate profits. It is important for the company to assess its capital allocation strategies and operational efficiency to enhance its overall financial performance.

Investors and stakeholders should closely monitor Avista Corp.'s efforts to enhance its return on total capital and evaluate the company's ability to generate sustainable returns on the capital invested in its business operations. Understanding the factors contributing to the fluctuations in return on total capital can provide valuable insights into the company's financial health and long-term growth prospects.