Generac Holdings Inc (GNRC)
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 | 498,488 | 385,413 | 553,924 | 718,404 | 482,540 |
| Long-term debt | US$ in thousands | 1,211,250 | 1,434,820 | 1,370,970 | 882,060 | 833,990 |
| Total stockholders’ equity | US$ in thousands | 2,494,280 | 2,340,250 | 2,257,380 | 2,213,770 | 1,390,290 |
| Return on total capital | 13.45% | 10.21% | 15.27% | 23.21% | 21.69% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $498,488K ÷ ($1,211,250K + $2,494,280K)
= 13.45%
Generac Holdings Inc's return on total capital has shown variability over the years. In December 31, 2020, the return on total capital was 21.69%, indicating that the company generated earnings relative to the total capital invested. This ratio improved to 23.21% by December 31, 2021, suggesting a more efficient use of capital in generating returns.
However, there was a decline in the return on total capital to 15.27% by December 31, 2022, and a further decrease to 10.21% by December 31, 2023. These lower percentages may indicate challenges in generating sufficient earnings compared to the total capital employed in the business.
By December 31, 2024, the return on total capital increased to 13.45%, showing a slight improvement from the previous year but still below the levels seen in 2020 and 2021. It is essential for the company to focus on optimizing its capital allocation to achieve higher returns on total capital in the future.
Peer comparison
Dec 31, 2024