Cleveland-Cliffs Inc (CLF)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -756,000 | 677,000 | 1,939,000 | 4,012,000 | -142,000 |
| Long-term debt | US$ in thousands | 7,065,000 | 3,137,000 | 4,249,000 | 5,238,000 | 5,390,000 |
| Total stockholders’ equity | US$ in thousands | 6,664,000 | 7,887,000 | 7,791,000 | 5,490,000 | 2,018,000 |
| Return on total capital | -5.51% | 6.14% | 16.10% | 37.40% | -1.92% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-756,000K ÷ ($7,065,000K + $6,664,000K)
= -5.51%
Cleveland-Cliffs Inc's return on total capital has shown significant fluctuations over the past few years. In 2020, the company experienced a negative return on total capital of -1.92%, indicating that the company's capital utilization was inefficient.
However, in 2021, there was a notable improvement with a return on total capital of 37.40%, suggesting a substantial increase in efficiency in generating returns from the total capital employed. This significant improvement could be attributed to better capital allocation or operational performance.
Subsequently, in 2022, the return on total capital decreased to 16.10%, indicating a decline in the company's ability to generate returns from its total capital base compared to the previous year. This could suggest changes in business strategies or market conditions impacting profitability.
In 2023, the return on total capital further decreased to 6.14%, implying that the company faced challenges in efficiently utilizing its total capital to generate returns, possibly due to operational issues or external factors affecting profitability.
By the end of 2024, Cleveland-Cliffs Inc's return on total capital dropped significantly to -5.51%, indicating a substantial decline in the company's ability to generate returns from its total capital, potentially signaling financial difficulties or poor capital management.
Overall, the fluctuating trend in Cleveland-Cliffs Inc's return on total capital highlights the importance of continuously monitoring and assessing the company's capital efficiency and performance to make well-informed strategic decisions for improving overall financial health.
Peer comparison
Dec 31, 2024