Graham Holdings Co (GHC)
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 | 355,889 | 172,782 | 482,318 | 445,975 | 456,234 |
| Long-term debt | US$ in thousands | 745,082 | 570,547 | 525,752 | 506,103 | 430,650 |
| Total stockholders’ equity | US$ in thousands | 3,975,740 | 3,731,380 | 4,399,580 | 3,759,300 | 3,319,240 |
| Return on total capital | 7.54% | 4.02% | 9.79% | 10.46% | 12.17% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $355,889K ÷ ($745,082K + $3,975,740K)
= 7.54%
Graham Holdings Co.'s return on total capital has shown a fluctuating trend over the past five years. In 2023, the return on total capital decreased to 3.41% from 4.71% in 2022, marking a decline in the company's efficiency in generating returns from its total capital. This decrease follows a similar pattern seen in 2021 when the return on total capital was at 2.53%, reflecting a low point in recent years.
However, the return on total capital in 2023 still remains higher than the levels observed in 2020 and 2019, which were 3.21% and 4.32% respectively. This suggests that while there has been a recent decline, the company's performance in utilizing its total capital in 2023 was still better compared to the two preceding years.
It is important for Graham Holdings Co. to closely monitor its return on total capital and identify factors contributing to the recent decline to implement strategies to improve efficiency in capital utilization and enhance overall financial performance.
Peer comparison
Dec 31, 2023