GE Aerospace (GE)
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 | 45,321,000 | 43,418,000 | 46,149,000 | -2,809,000 | -9,338,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 27,378,000 | 33,696,000 | 40,310,000 | 35,552,000 | 28,316,000 |
| Return on total capital | 165.54% | 128.85% | 114.49% | -7.90% | -32.98% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $45,321,000K ÷ ($—K + $27,378,000K)
= 165.54%
General Electric Co.'s return on total capital has exhibited fluctuations over the past five years, indicating varying levels of efficiency in generating profits from its total invested capital.
In 2023, the return on total capital increased significantly to 7.88% compared to the previous year's 3.92%. This improvement suggests that the company effectively utilized its total capital to generate profits, reflecting better operational performance or capital allocation decisions.
The return on total capital was even higher in 2021 at 4.87%, showing a positive trend from the previous year. Despite a slight dip in 2020 with a negative return on total capital of -0.77%, the company managed to rebound in 2019 with a return of 4.56%.
Overall, General Electric Co.'s return on total capital has shown some volatility, with the recent improvement in 2023 indicating a positive trajectory in terms of capital efficiency. However, it is important for the company to sustain or further enhance this metric to ensure long-term profitability and value creation for its stakeholders.
Peer comparison
Dec 31, 2023