Duolingo Inc (DUOL)
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 | 62,595 | -12,921 | -64,897 | 51 | -16,011 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 824,550 | 655,501 | 542,078 | 513,056 | -80,691 |
| Return on total capital | 7.59% | -1.97% | -11.97% | 0.01% | — |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $62,595K ÷ ($—K + $824,550K)
= 7.59%
Return on total capital is a key financial metric that evaluates a company's efficiency in generating profits from the total capital employed in the business. Looking at the trend for Duolingo Inc over the past few years, the return on total capital has shown significant fluctuations.
As of December 31, 2020, the return on total capital was not available (denoted by "—"), indicating a lack of data for that specific period. In the subsequent year, as of December 31, 2021, the return on total capital was a mere 0.01%, suggesting a low efficiency in generating profits relative to the total capital employed.
The performance deteriorated notably in the following year, with a significant decline in return on total capital to -11.97% as of December 31, 2022. This negative figure indicates that the company's profitability was insufficient to cover the capital invested, raising concerns about the effectiveness of capital utilization.
However, there was a slight improvement in the return on total capital in the subsequent year, as of December 31, 2023, where it stood at -1.97%. While still negative, this indicates a potential recovery in profitability compared to the previous year.
As of the most recent period ending December 31, 2024, the return on total capital surged to 7.59%, showing a considerable improvement compared to the preceding years. This increase suggests that the company has become more efficient in generating profits relative to the total capital employed.
In conclusion, Duolingo Inc's return on total capital has exhibited fluctuating performance over the analyzed period, with a mix of negative and positive returns. The company's ability to maintain and further improve this metric will be crucial in demonstrating effective capital management and sustainable profitability in the future.
Peer comparison
Dec 31, 2024