Baker Hughes Co (BKR)

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	3,081,000	2,317,000	1,185,000	1,310,000	-15,978,000
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	16,895,000	15,368,000	14,394,000	14,830,000	12,893,000
Return on total capital		18.24%	15.08%	8.23%	8.83%	-123.93%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $3,081,000K ÷ ($—K + $16,895,000K)
= 18.24%

Return on total capital is a key financial metric that indicates the efficiency of a company in generating profits from its total invested capital. For Baker Hughes Co, the return on total capital fluctuated significantly over the years as follows:

- As of December 31, 2020, the return on total capital was notably negative at -123.93%, indicating that the company's capital investment did not yield sufficient returns to cover both debt and equity holders.

- However, there was a positive turnaround in the subsequent years. By December 31, 2021, the return on total capital improved to 8.83%, suggesting a better utilization of the company's capital resources to generate profits.

- The trend continued with a slight dip to 8.23% by December 31, 2022, indicating relatively stable performance in capital efficiency.

- Subsequently, there was a significant increase in the return on total capital to 15.08% by December 31, 2023, showcasing improved profitability and effective capital allocation.

- By December 31, 2024, Baker Hughes Co further enhanced its capital efficiency, achieving a return on total capital of 18.24%, signaling a robust performance in maximizing returns for both debt and equity providers.

Overall, the positive trajectory in Baker Hughes Co's return on total capital reflects the company's efforts in optimizing its capital structure and effectively leveraging its investments to generate profitable returns for its stakeholders.