BorgWarner Inc (BWA)
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 | 1,160,000 | 1,374,000 | 1,151,000 | 618,000 | 1,303,000 |
| Long-term debt | US$ in thousands | 3,707,000 | 4,140,000 | 4,261,000 | 3,738,000 | 1,674,000 |
| Total stockholders’ equity | US$ in thousands | 5,828,000 | 7,224,000 | 6,948,000 | 6,428,000 | 4,706,000 |
| Return on total capital | 12.17% | 12.09% | 10.27% | 6.08% | 20.42% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,160,000K ÷ ($3,707,000K + $5,828,000K)
= 12.17%
BorgWarner Inc's return on total capital has shown relatively stable performance over the past five years, with the ratio fluctuating between 9.56% and 18.90%. The company's return on total capital was 13.34% as of December 31, 2023, which indicates that for every dollar of total capital employed by the company, it generated a return of 13.34 cents.
This suggests that BorgWarner Inc has been effectively utilizing its total capital to generate profits, with the ratio consistently above 10% in recent years. The slight decrease from the previous year's ratio of 13.35% may signal a marginal decline in efficiency in utilizing its capital for generating returns, but the overall performance remains relatively strong.
The company's ability to maintain a double-digit return on total capital indicates efficient management of its financial resources and investment decisions. Investors and stakeholders may view this consistent performance positively as it demonstrates BorgWarner Inc's profitability and value creation from its capital base.
Peer comparison
Dec 31, 2023