Element Solutions Inc (ESI)
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 | 344,000 | 178,400 | 334,800 | 311,600 | 144,500 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,383,000 | 2,328,500 | 2,332,500 | 2,480,700 | 2,319,800 |
| Return on total capital | 14.44% | 7.66% | 14.35% | 12.56% | 6.23% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $344,000K ÷ ($—K + $2,383,000K)
= 14.44%
The analysis of Element Solutions Inc.'s return on total capital over the period from December 31, 2020, to December 31, 2024, reveals significant fluctuations indicative of changing operational efficiency and capital utilization.
In 2020, the return on total capital stood at 6.23%, reflecting a relatively modest level of profitability relative to the company's total capital base. This figure increased substantially in 2021 to 12.56%, more than doubling the previous year's performance, signifying improved operational efficiency and better capital deployment during that period.
The upward trend continued into 2022, with the return reaching 14.35%. This peak suggests that the company was effectively leveraging its capital to generate higher earnings, reaching a peak in the given timeframe. However, in 2023, a decline to 7.66% was observed, indicating a notable reduction in the efficiency of capital utilization or possible pressures on profitability.
Interestingly, in 2024, the return on total capital rebounded to 14.44%, surpassing the previous peak in 2022. This resurgence implies a recovery or strategic improvements that enhanced the company’s capacity to generate earnings from its capital investments.
Overall, the data depicts a pattern characterized by rapid growth and high efficiency around 2021 and 2022, followed by a significant dip in 2023, and then a strong recovery in 2024. These fluctuations could reflect cyclical industry conditions, company-specific strategic shifts, or evolving market dynamics impacting profitability and capital efficiency.
Peer comparison
Dec 31, 2024