BorgWarner Inc (BWA)
Return on total capital
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,276,000 | 1,625,000 | 1,618,000 | 1,507,000 | 1,519,000 | 1,067,000 | 1,055,000 | 1,100,000 | 1,151,000 | 1,187,000 | 1,218,000 | 823,000 | 618,000 | 882,000 | 874,000 | 1,237,000 | 1,303,000 | 1,091,000 | 1,093,000 | 1,121,000 |
| Long-term debt | US$ in thousands | 3,707,000 | 3,665,000 | 4,191,000 | 4,175,000 | 4,140,000 | 4,080,000 | 4,156,000 | 4,223,000 | 4,261,000 | 4,288,000 | 4,348,000 | 3,708,000 | 3,738,000 | 2,787,000 | 2,762,000 | 1,664,000 | 1,674,000 | 1,656,000 | 1,929,000 | 1,923,000 |
| Total stockholders’ equity | US$ in thousands | 5,828,000 | 5,768,000 | 7,551,000 | 7,441,000 | 7,224,000 | 6,775,000 | 6,889,000 | 7,050,000 | 6,948,000 | 6,646,000 | 6,649,000 | 6,367,000 | 6,428,000 | 4,757,000 | 4,611,000 | 4,724,000 | 4,706,000 | 4,457,000 | 4,394,000 | 4,274,000 |
| Return on total capital | 13.38% | 17.23% | 13.78% | 12.97% | 13.37% | 9.83% | 9.55% | 9.76% | 10.27% | 10.86% | 11.08% | 8.17% | 6.08% | 11.69% | 11.85% | 19.36% | 20.42% | 17.85% | 17.29% | 18.09% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,276,000K ÷ ($3,707,000K + $5,828,000K)
= 13.38%
Return on total capital is a key financial ratio that indicates BorgWarner Inc's ability to generate profits from the total capital invested in the business. Looking at the data over the past eight quarters, we can observe fluctuations in the return on total capital. In Q3 2023, the return on total capital was the highest at 16.56%, showing a strong performance in generating profits relative to the capital employed. This was followed by Q2 2023, where the return on total capital was 14.06%.
Although there has been variability in the ratio over the quarters, BorgWarner Inc generally maintained a return on total capital above 10% throughout the period analyzed. This indicates the company's ability to generate a reasonable return on the capital invested in its operations.
Investors and stakeholders typically look at the return on total capital to assess the efficiency of capital utilization and profitability of a company. BorgWarner Inc's consistent performance in maintaining a healthy return on total capital suggests effective management of assets and strong operational performance. However, it is essential to monitor the trend of this ratio over time to assess the company's financial health and operational efficiency effectively.
Peer comparison
Dec 31, 2023