Avista Corporation (AVA)

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 328,000 277,216 193,279 226,846 226,267
Long-term debt US$ in thousands — — — — —
Total stockholders’ equity US$ in thousands 2,591,000 2,485,320 2,334,670 2,154,740 2,029,730
Return on total capital 12.66% 11.15% 8.28% 10.53% 11.15%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $328,000K ÷ ($—K + $2,591,000K)
= 12.66%

Return on total capital is a crucial financial metric that indicates how efficiently a company is utilizing its capital to generate profits. In the case of Avista Corporation, the return on total capital has fluctuated over the past few years.

As of December 31, 2020, Avista Corporation's return on total capital stood at 11.15%. This indicates that for every dollar of total capital employed, the company generated a return of 11.15%.

By December 31, 2021, the return on total capital had slightly decreased to 10.53%. This could suggest a slight decrease in the company's efficiency in utilizing its capital to generate profits.

In the following year, by December 31, 2022, the return on total capital decreased further to 8.28%. This significant drop could raise concerns about Avista Corporation's ability to generate adequate returns on its total capital.

However, there was a notable improvement by December 31, 2023, as the return on total capital increased to 11.15%, matching the level seen in 2020. This uptick indicates a potential recovery in the company's capital efficiency.

The most recent data as of December 31, 2024, shows a return on total capital of 12.66%. This is a positive sign, suggesting that Avista Corporation has improved its efficiency in utilizing its total capital to generate higher returns.

Overall, fluctuations in Avista Corporation's return on total capital indicate changes in the company's ability to generate profits relative to the capital it has invested. Monitoring this metric over time can provide insights into the company's financial performance and efficiency in capital utilization.