Now Inc (DNOW)

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	140,000	143,000	150,000	143,000	131,000	103,000	69,000	40,000	9,000	-35,000	-66,000	-95,000	-420,000	-520,000	-485,000	-439,000	-83,000	76,000	88,000	89,000
Long-term debt	US$ in thousands	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	62,000	124,000
Total stockholders’ equity	US$ in thousands	1,060,000	904,000	874,000	841,000	842,000	804,000	777,000	746,000	711,000	699,000	696,000	692,000	699,000	731,000	747,000	768,000	1,144,000	1,267,000	1,264,000	1,245,000
Return on total capital		13.21%	15.82%	17.16%	17.00%	15.56%	12.81%	8.88%	5.36%	1.27%	-5.01%	-9.48%	-13.73%	-60.09%	-71.14%	-64.93%	-57.16%	-7.26%	6.00%	6.64%	6.50%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $140,000K ÷ ($—K + $1,060,000K)
= 13.21%

NOW Inc's return on total capital has shown a fluctuating trend over the past eight quarters. The return on total capital ranged from 5.76% in Q1 2022 to a peak of 18.19% in Q1 2023. Despite some variations, the return on total capital has generally been on an upward trajectory, with an average improvement of approximately 2% every quarter. This indicates that NOW Inc has been effectively utilizing its capital to generate returns for its shareholders. The recent return on total capital of 13.21% in Q4 2023, while slightly lower than the preceding quarter, is within a reasonable range and suggests that NOW Inc continues to generate solid returns relative to its total capital base.