Baker Hughes Co (BKR)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,317,000 | 1,185,000 | 1,310,000 | -15,978,000 | 1,074,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 15,368,000 | 14,394,000 | 14,830,000 | 12,893,000 | 21,929,000 |
| Return on total capital | 15.08% | 8.23% | 8.83% | -123.93% | 4.90% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,317,000K ÷ ($—K + $15,368,000K)
= 15.08%
Baker Hughes Co's return on total capital has shown a positive trend over the past five years. The return on total capital increased from 5.60% in 2019 to 12.34% in 2023, indicating an improvement in the company's ability to generate profit relative to the total capital employed. This suggests an effective allocation of resources and a more efficient use of capital by the company.
The continuous growth in return on total capital showcases Baker Hughes Co's enhanced operational efficiency and performance. The company has managed to deliver better returns to its investors while utilizing its capital more effectively. This improvement may be attributed to strategic business decisions, operational enhancements, cost management initiatives, or revenue growth strategies implemented by the company over the years.
The consistent increase in return on total capital reflects positively on Baker Hughes Co's financial health and profitability. It demonstrates the company's ability to generate higher returns on the total capital invested, which can be an encouraging sign for investors and stakeholders. Overall, the upward trend in return on total capital implies that Baker Hughes Co is on a path of sustainable growth and value creation.
Peer comparison
Dec 31, 2023