Edgewell Personal Care Co (EPC)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 226,200 | 195,500 | 215,000 | 148,500 | -327,700 |
| Long-term debt | US$ in thousands | 1,360,700 | 1,391,400 | 1,234,200 | 1,237,900 | 1,097,800 |
| Total stockholders’ equity | US$ in thousands | 1,540,500 | 1,467,100 | 1,590,800 | 1,438,600 | 1,303,500 |
| Return on total capital | 7.80% | 6.84% | 7.61% | 5.55% | -13.65% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $226,200K ÷ ($1,360,700K + $1,540,500K)
= 7.80%
Return on total capital is a key financial ratio that indicates how effectively a company is utilizing its capital to generate profits. The ratio is calculated by dividing the company's net operating profit after tax (NOPAT) by its total capital.
Looking at Edgewell Personal Care Co's return on total capital over the past five years, we can observe fluctuations in the performance of the company in terms of generating returns on its total capital.
In 2023, the return on total capital stands at 8.34%, showing an improvement from the previous year's 6.85%. This demonstrates that the company has been able to generate higher returns relative to its total capital base. This increase can be seen as a positive development, indicating improved efficiency in utilizing its capital to generate profits.
In 2022, the return on total capital was 6.85%, which was lower compared to 2021. This decrease indicates a potential decline in the company's ability to generate profits from its total capital, which may be a cause for concern.
In 2021, the return on total capital was 8.21%, showing a slight decrease from the prior year's figure of 8.48%. Although there was a decrease, the return on total capital remained relatively strong, indicating efficient capital utilization by the company.
In 2020, the return on total capital was 6.48%, reflecting a decrease from the previous year. This decline suggests a potential inefficiency in generating profits relative to the total capital employed by the company.
In 2019, the return on total capital was 11.46%, marking a significant increase compared to the previous year. This improvement highlights the company's ability to effectively utilize its capital to generate higher profits.
Overall, the fluctuation in Edgewell Personal Care Co's return on total capital over the past five years suggests varying levels of efficiency in deploying its capital to generate returns. The company should aim for consistent improvement in this ratio to ensure the optimal utilization of its capital base and sustained profitability.
Peer comparison
Sep 30, 2023