Axon Enterprise Inc. (AXON)
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 | 388,602 | 161,995 | 196,518 | -173,696 | -12,950 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,327,660 | 1,612,030 | 1,268,490 | 1,047,850 | 976,255 |
| Return on total capital | 16.69% | 10.05% | 15.49% | -16.58% | -1.33% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $388,602K ÷ ($—K + $2,327,660K)
= 16.69%
Return on total capital is an essential financial ratio that indicates a company's efficiency in generating returns from all of its invested capital, including both equity and debt. For Axon Enterprise Inc., the return on total capital has shown significant fluctuations over the past five years.
In December 31, 2020, the return on total capital was negative at -1.33%, indicating that the company was not effectively utilizing its capital to generate returns. The situation worsened by December 31, 2021, with a larger negative return of -16.58%, suggesting further inefficiencies in capital deployment.
However, there was a notable turnaround by December 31, 2022, when the return on total capital improved significantly to 15.49%, indicating a more efficient use of capital leading to higher returns. The positive trend continued into December 31, 2023, with a return of 10.05%, although slightly lower than the previous year.
By December 31, 2024, Axon Enterprise Inc. achieved a return on total capital of 16.69%, demonstrating a further improvement in capital utilization efficiency and increased profitability.
Overall, the fluctuation in return on total capital for Axon Enterprise Inc. over the five-year period highlights the importance of effective capital management and the potential impact on the company's overall financial performance.
Peer comparison
Dec 31, 2024