BorgWarner Inc (BWA)
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 | 546,000 | 1,160,000 | 1,374,000 | 1,151,000 | 618,000 |
| Long-term debt | US$ in thousands | 3,763,000 | 3,707,000 | 4,140,000 | 4,261,000 | 3,738,000 |
| Total stockholders’ equity | US$ in thousands | 5,532,000 | 5,828,000 | 7,224,000 | 6,948,000 | 6,428,000 |
| Return on total capital | 5.87% | 12.17% | 12.09% | 10.27% | 6.08% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $546,000K ÷ ($3,763,000K + $5,532,000K)
= 5.87%
BorgWarner Inc's return on total capital has exhibited fluctuating performance over the past five years. The return on total capital was 6.08% as of December 31, 2020, which increased to 10.27% by December 31, 2021, indicating improved capital efficiency. Subsequently, there was a significant increase to 12.09% by December 31, 2022, reflecting better utilization of total capital. The trend continued to December 31, 2023, with a slight increase to 12.17%, showcasing ongoing efficient capital deployment.
However, there was a downturn in performance by December 31, 2024, with the return on total capital dropping to 5.87%. This decrease may suggest potential challenges in generating returns relative to the total capital employed during that period. It is important for BorgWarner Inc to assess the underlying factors contributing to this decline and implement strategies to enhance capital efficiency in order to maintain sustainable financial performance over the long term.
Peer comparison
Dec 31, 2024