Central Garden & Pet Company (CENT)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 219,016 | 256,639 | 252,378 | 196,910 | 162,004 |
| Long-term debt | US$ in thousands | 1,187,960 | 1,186,240 | 1,184,680 | 693,956 | 693,037 |
| Total stockholders’ equity | US$ in thousands | 1,451,350 | 1,333,710 | 1,222,250 | 1,076,800 | 996,007 |
| Return on total capital | 8.30% | 10.18% | 10.49% | 11.12% | 9.59% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $219,016K ÷ ($1,187,960K + $1,451,350K)
= 8.30%
The return on total capital for Central Garden & Pet Co. has shown a declining trend over the past five years. The ratio decreased from 9.00% in 2019 to 7.98% in 2023. This indicates that the company's ability to generate profits from its total capital employed has weakened over this period.
A return on total capital of 7.98% in 2023 means that for every dollar of total capital invested, the company generated a return of approximately 7.98 cents. This suggests a decreasing efficiency in the utilization of the company's total capital to generate profits.
It is important for stakeholders to closely monitor this trend and assess the factors contributing to the decline in return on total capital, as it may indicate inefficiencies in the company's capital allocation and operational performance. This analysis highlights the need for the company to evaluate its capital utilization and implement strategies to improve its return on total capital in order to enhance overall financial performance.
Peer comparison
Sep 30, 2023