Clean Harbors Inc (CLH)
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 | 670,232 | 612,439 | 634,747 | 347,887 | 251,336 |
| Long-term debt | US$ in thousands | 2,771,120 | 2,291,720 | 2,414,830 | 2,517,020 | 1,549,640 |
| Total stockholders’ equity | US$ in thousands | 2,573,530 | 2,247,510 | 1,922,320 | 1,513,890 | 1,341,550 |
| Return on total capital | 12.54% | 13.49% | 14.64% | 8.63% | 8.69% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $670,232K ÷ ($2,771,120K + $2,573,530K)
= 12.54%
Clean Harbors Inc's return on total capital has shown variability over the past five years.
As of December 31, 2020, the return on total capital was 8.69%, which remained relatively stable at 8.63% by December 31, 2021. Subsequently, there was a significant improvement in the company's performance, with the return on total capital increasing to 14.64% by December 31, 2022.
However, this high return was not sustained, as evidenced by the decline to 13.49% by December 31, 2023, and further down to 12.54% by December 31, 2024.
It is vital for stakeholders to closely monitor this ratio to understand the company's ability to generate returns from its total capital consistently. The fluctuation in the return on total capital indicates the need for Clean Harbors Inc to focus on managing its capital more efficiently to ensure sustainable profitability in the long term.