Genuine Parts Co (GPC)
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 | 1,806,820 | 1,646,490 | 1,262,500 | 277,919 | 925,298 |
| Long-term debt | US$ in thousands | 3,550,930 | 3,076,790 | 2,409,360 | 2,516,610 | 2,802,060 |
| Total stockholders’ equity | US$ in thousands | 4,401,050 | 3,790,360 | 3,490,740 | 3,204,800 | 3,674,710 |
| Return on total capital | 22.72% | 23.98% | 21.40% | 4.86% | 14.29% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,806,820K ÷ ($3,550,930K + $4,401,050K)
= 22.72%
Over the past five years, Genuine Parts Co. has demonstrated a consistently strong return on total capital, with an average of approximately 19.68%. The company's return on total capital has shown a positive trend, increasing from 15.45% in 2019 to 21.03% in 2023. This indicates that Genuine Parts Co. has been effective in generating profits relative to the total capital employed in its business operations.
The company's return on total capital of 21.03% in 2023 reflects that for every dollar of total capital invested, Genuine Parts Co. generated a profit of approximately $0.21. This level of performance suggests that the company has efficiently utilized its capital resources to generate returns for its shareholders.
The upward trend in the return on total capital indicates that Genuine Parts Co. has been successful in improving its operational efficiency, profitability, and overall financial performance over the years. Investors and stakeholders may view this as a positive indication of the company's ability to generate value from its capital investments.
Overall, Genuine Parts Co.'s consistent and improving returns on total capital demonstrate its financial stability, effective capital management, and potential for continued growth and value creation in the future.