Greif Bros Corporation (GEF)
Return on total capital
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 456,400 | 458,600 | 439,500 | 422,700 | 502,000 | 594,800 | 636,700 | 681,700 | 672,800 | 588,300 | 577,700 | 553,200 | 581,000 | 572,500 | 526,700 | 413,600 | 286,200 | 303,300 | 325,000 | 391,400 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,040,400 | 2,075,700 | 2,056,900 | 2,009,100 | 1,992,500 | 1,947,900 | 1,948,300 | 1,879,800 | 1,845,400 | 1,761,300 | 1,701,100 | 1,686,400 | 1,493,300 | 1,514,300 | 1,448,900 | 1,374,200 | 1,205,300 | 1,152,200 | 1,141,300 | 1,083,200 |
| Return on total capital | 22.37% | 22.09% | 21.37% | 21.04% | 25.19% | 30.54% | 32.68% | 36.26% | 36.46% | 33.40% | 33.96% | 32.80% | 38.91% | 37.81% | 36.35% | 30.10% | 23.75% | 26.32% | 28.48% | 36.13% |
January 31, 2025 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $456,400K ÷ ($—K + $2,040,400K)
= 22.37%
Return on total capital is a key financial ratio that indicates how effectively a company is utilizing its capital to generate profits. In the case of Greif Bros Corporation, the return on total capital has shown fluctuations over the past few years.
The ratio stood at a relatively high level of 36.13% as of April 30, 2020, indicating strong profitability relative to the capital invested. However, there was a dip in the ratio to 23.75% by January 31, 2021, which could indicate a decrease in profitability or inefficient capital utilization during that period.
Subsequently, the return on total capital improved, reaching a peak of 38.91% by January 31, 2022, suggesting a more efficient use of capital and higher profitability. Although there were fluctuations in the ratio in the following periods, it generally remained above 30%, indicating that Greif Bros Corporation continued to generate healthy returns on its total capital.
However, a decline in the return on total capital was observed towards the end of the period under review, with the ratio dropping to 22.37% as of January 31, 2025. This decrease may raise concerns about the company's ability to maintain profitability and effectively utilize its capital in the future.
Overall, it is essential for Greif Bros Corporation to closely monitor its return on total capital to ensure sustainable profitability and efficient capital allocation in order to enhance shareholder value in the long term.