Avient Corp (AVNT)
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 | 330,400 | 202,600 | 246,100 | 308,600 | 220,800 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,329,600 | 2,319,200 | 2,334,500 | 1,774,700 | 1,683,600 |
| Return on total capital | 14.18% | 8.74% | 10.54% | 17.39% | 13.11% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $330,400K ÷ ($—K + $2,329,600K)
= 14.18%
To analyze Avient Corp's return on total capital over the five-year period from December 31, 2020, to December 31, 2024, we observe the following trends:
1. The return on total capital increased from 13.11% in 2020 to 17.39% in 2021, indicating improved efficiency in generating profits from the total invested capital. This could be a positive sign of effective capital allocation and operational performance during that period.
2. However, the return on total capital decreased to 10.54% in 2022 and further dropped to 8.74% in 2023. These declines could signify challenges faced by Avient Corp in maintaining profitability relative to its total capital base. It might suggest issues like increased capital expenditures, lower revenue growth, or operational inefficiencies.
3. In 2024, there was a rebound in the return on total capital to 14.18%. This improvement could indicate that Avient Corp implemented strategic measures to enhance its capital utilization and profitability, leading to a better return for its investors.
In conclusion, Avient Corp's return on total capital fluctuated over the five-year period, showing both positive and negative trends. It is essential for the company to continue monitoring and optimizing its capital structure and operational efficiency to sustain and grow its returns in the future.
Peer comparison
Dec 31, 2024