Chesapeake Energy Corp (CHK)

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	3,221,000	4,694,000	5,609,000	6,419,000	3,811,000	3,002,000	1,655,000	-116,000	969,000	-850,000	-1,232,000	-950,000	-9,422,000	-9,226,000	-8,391,000	-7,979,000	12,000	967,000	872,000	496,000
Long-term debt	US$ in thousands	2,028,000	2,032,000	2,036,000	2,040,000	3,093,000	2,717,000	3,046,000	2,774,000	2,278,000	1,259,000	1,261,000	1,262,000	0	0	0	9,163,000	9,073,000	9,133,000	9,701,000	9,167,000
Total stockholders’ equity	US$ in thousands	10,729,000	10,268,000	10,396,000	10,283,000	9,124,000	6,347,000	5,808,000	5,383,000	5,671,000	3,038,000	3,413,000	3,881,000	-5,341,000	-4,940,000	-4,209,000	-3,945,000	4,364,000	4,696,000	4,191,000	4,097,000
Return on total capital		25.25%	38.16%	45.12%	52.09%	31.19%	33.12%	18.69%	-1.42%	12.19%	-19.78%	-26.36%	-18.47%	—	—	—	-152.91%	0.09%	6.99%	6.28%	3.74%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $3,221,000K ÷ ($2,028,000K + $10,729,000K)
= 25.25%

Return on total capital is a key financial ratio that indicates the efficiency with which a company generates profits from its total capital employed. Looking at the data provided for Chesapeake Energy Corp, we see fluctuations in the return on total capital over the past few quarters.

In the most recent quarter, the return on total capital stood at 25.25%, indicating that the company generated a return of 25.25% on its total capital. This represents a healthy performance and suggests that the company is utilizing its capital efficiently to generate profits.

The return on total capital has shown a generally upward trend over the past year, with significant improvement from negative figures in the first quarter of 2020 to positive figures in the subsequent quarters. This improvement suggests that the company has been able to enhance its profitability and efficiency in capital utilization.

However, there are some periods of negative returns, such as in the first quarter of 2022 and the first quarter of 2020, which indicate that the company faced challenges in generating profits relative to the capital employed during those periods.

Overall, the positive trend in the return on total capital for Chesapeake Energy Corp indicates improving efficiency in utilizing its capital to generate returns for shareholders. It is important for the company to sustain this positive momentum and continue to optimize its capital allocation strategies to drive long-term profitability and value creation.