DigitalOcean Holdings Inc (DOCN)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 35,721 | -14,730 | -14,457 |
| Long-term debt | US$ in thousands | 1,477,800 | 1,470,270 | 1,462,680 |
| Total stockholders’ equity | US$ in thousands | -313,698 | 47,569 | 578,197 |
| Return on total capital | 3.07% | -0.97% | -0.71% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $35,721K ÷ ($1,477,800K + $-313,698K)
= 3.07%
DigitalOcean Holdings Inc's return on total capital has shown an improvement over the last three years. In 2023, the return on total capital increased to 3.07%, indicating that the company generated a return of 3.07% on its total invested capital. This is a positive sign, as it shows the company's ability to generate profits relative to the total capital employed in the business.
In contrast, in 2022 and 2021, the company reported negative returns on total capital of -0.97% and -0.71% respectively. These negative figures suggest that the company was not effectively utilizing its total capital to generate profits during those years.
Overall, the positive trend in return on total capital from 2021 to 2023 indicates potential improvement in the company's profitability and efficiency in managing its capital resources. However, it is essential for DigitalOcean Holdings Inc to continue monitoring and enhancing its capital allocation strategies to sustain and further improve its return on total capital in the future.
Peer comparison
Dec 31, 2023