Avanos Medical Inc (AVNS)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	-43,400	-21,100	-10,500	72,900	78,400	71,400	57,200	32,600	10,600	-63,500	-67,000	-62,000	-47,300	-2,400	-19,300	-25,500	-49,000	-52,200	-26,200	26,600
Long-term debt	US$ in thousands	—	—	—	—	226,300	—	—	—	130,000	145,000	165,000	175,000	180,000	—	—	—	248,100	247,900	247,800	247,900
Total stockholders’ equity	US$ in thousands	1,236,300	1,222,100	1,234,800	1,298,700	1,291,200	1,263,500	1,259,000	1,262,800	1,270,600	1,267,100	1,301,700	1,257,400	1,262,100	1,289,900	1,261,600	1,256,500	1,272,600	1,266,900	1,276,900	1,280,100
Return on total capital		-3.51%	-1.73%	-0.85%	5.61%	5.17%	5.65%	4.54%	2.58%	0.76%	-4.50%	-4.57%	-4.33%	-3.28%	-0.19%	-1.53%	-2.03%	-3.22%	-3.45%	-1.72%	1.74%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $-43,400K ÷ ($—K + $1,236,300K)
= -3.51%

To analyze Avanos Medical Inc's return on total capital based on the provided data, we observe a fluctuating trend over the past eight quarters. The return on total capital has ranged from a low of 1.25% in Q4 2023 to a high of 5.09% in Q4 2022.

The return on total capital indicates the efficiency of the company in generating returns from the total capital employed in its operations. A declining trend in this ratio could suggest a decrease in the company's ability to generate profits relative to its invested capital.

In this case, the return on total capital has shown a general downward trend over the last two quarters, decreasing from 4.78% in Q1 2023 to 1.25% in Q4 2023. This decline may raise concerns about the company's capital utilization efficiency and profitability.

It is important for Avanos Medical Inc to closely monitor and address the factors influencing its return on total capital to ensure sustainable and profitable operations in the future. Further investigation into the underlying reasons for the fluctuating trend in this ratio could provide insights for strategic decision-making and performance improvement.