Cognizant Technology Solutions Corp Class A (CTSH)

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	2,892,000	2,835,000	3,039,000	2,839,000	2,120,000
Long-term debt	US$ in thousands	875,000	606,000	638,000	626,000	663,000
Total stockholders’ equity	US$ in thousands	14,408,000	13,227,000	12,309,000	11,991,000	10,836,000
Return on total capital		18.92%	20.49%	23.47%	22.50%	18.44%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,892,000K ÷ ($875,000K + $14,408,000K)
= 18.92%

The return on total capital for Cognizant Technology Solutions Corp Class A has shown a generally positive trend over the five-year period from 2020 to 2024. The company's return on total capital increased from 18.44% in December 2020 to 23.47% in December 2022, reflecting improving efficiency in generating profits relative to the total capital employed.

However, there was a slight dip in the return on total capital to 20.49% in December 2023, followed by a further decrease to 18.92% in December 2024. These declines may indicate either a decrease in profitability or an increase in the amount of capital employed in the business.

Overall, while the return on total capital remained relatively high throughout the period, management should monitor the trend closely to ensure efficient allocation of capital and sustainable profitability in the future.