Choice Hotels International Inc (CHH)

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	400,736	480,603	423,172	102,034	316,736
Long-term debt	US$ in thousands	1,068,750	1,200,550	844,123	1,058,740	844,102
Total stockholders’ equity	US$ in thousands	35,598	154,660	265,882	-5,752	-23,511
Return on total capital		36.29%	35.46%	38.12%	9.69%	38.60%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $400,736K ÷ ($1,068,750K + $35,598K)
= 36.29%

Choice Hotels International Inc's return on total capital has shown fluctuations over the past five years. The return on total capital was highest in 2021 at 38.12%, indicating that the company was able to generate a significant return relative to the total capital employed in that year.

In 2019, the return on total capital was also substantial at 38.60%, reflecting a strong performance in utilizing capital effectively to generate earnings. However, there was a notable decrease in 2020, with a return on total capital of 9.69%, suggesting a dip in profitability and efficiency in capital utilization during that year.

The return on total capital improved significantly in 2022 and 2023, reaching 35.46% and 36.29% respectively. These higher returns indicate that the company was able to enhance its profitability and efficiency in generating income relative to the total capital invested, which is a positive trend for investors and stakeholders.

Overall, Choice Hotels International Inc's return on total capital has varied over the five-year period, with the company experiencing both highs and lows. It is essential for stakeholders to closely monitor this metric to assess the company's ability to generate returns on the capital employed efficiently.