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.
Peer comparison
Dec 31, 2023