Ecolab Inc (ECL)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,083,700 | 1,562,500 | 1,598,600 | 1,395,700 | 1,845,200 |
| Long-term debt | US$ in thousands | — | — | — | 6,671,200 | 6,274,000 |
| Total stockholders’ equity | US$ in thousands | 8,044,700 | 7,236,100 | 7,224,200 | 6,166,500 | 8,685,300 |
| Return on total capital | 25.90% | 21.59% | 22.13% | 10.87% | 12.33% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,083,700K ÷ ($—K + $8,044,700K)
= 25.90%
The return on total capital for Ecolab, Inc. has shown fluctuations over the past five years. In 2019, the return on total capital was the highest at 14.80%, indicating the company generated a significant return relative to the total capital employed. However, this ratio has been on a slight declining trend since then, with a notable drop to 10.64% in 2021 followed by a slight recovery in 2022 and 2023.
Despite the fluctuations, Ecolab, Inc. has generally maintained a return on total capital above 10% in recent years, suggesting the company has been effective in generating returns relative to the total capital invested in its operations. This metric is important as it reflects the company's efficiency in utilizing its capital to generate profits for its investors. Further analysis would be beneficial to understand the factors driving the changes in the return on total capital over the years.
Peer comparison
Dec 31, 2023