Garmin Ltd (GRMN)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,593,993 | 1,418,366 | 1,251,260 | 1,193,588 | 1,092,160 | 1,018,880 | 987,884 | 996,269 | 1,027,843 | 1,075,789 | 1,119,086 | 1,197,518 | 1,218,621 | 1,274,768 | 1,309,199 | 1,126,416 | 1,054,239 | 959,495 | 903,854 | 971,686 |
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 7,848,400 | 7,506,550 | 7,004,980 | 7,246,100 | 7,012,060 | 6,349,280 | 6,123,820 | 6,405,000 | 6,204,340 | 5,878,190 | 5,865,930 | 6,248,840 | 6,114,160 | 5,854,740 | 5,584,250 | 5,715,830 | 5,516,120 | 5,104,340 | 4,740,860 | 4,934,400 |
| Return on total capital | 20.31% | 18.90% | 17.86% | 16.47% | 15.58% | 16.05% | 16.13% | 15.55% | 16.57% | 18.30% | 19.08% | 19.16% | 19.93% | 21.77% | 23.44% | 19.71% | 19.11% | 18.80% | 19.07% | 19.69% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,593,993K ÷ ($—K + $7,848,400K)
= 20.31%
Return on total capital (ROTC) is a key financial ratio that measures a company's ability to generate returns from all sources of capital invested in the business. The trend analysis of Garmin Ltd's ROTC from March 31, 2020, to December 31, 2024, shows fluctuations in the company's efficiency in utilizing its total capital.
Garmin Ltd's ROTC started at 19.69% on March 31, 2020, and showed a slight decrease to 19.07% by June 30, 2020. Over the following quarters, the ROTC remained relatively stable, ranging between 18.80% to 19.71%. Notably, a significant improvement was observed in the second quarter of 2021, with ROTC jumping to 23.44%. This peak was followed by a slight decline but remained relatively high compared to the earlier periods.
From March 31, 2022, to December 31, 2024, Garmin's ROTC experienced a downward trend, decreasing from 19.16% to 20.31%. Despite the fluctuations, the company's ROTC generally remained above 15%, indicating that Garmin was efficiently generating returns on the total capital invested.
It is crucial for Garmin to monitor its ROTC closely to ensure efficient use of capital and sustain profitability in the long term. A consistent ROTC above the cost of capital signifies that the company is creating value for its investors and stakeholders. Management should focus on strategies to enhance efficiency in capital allocation and optimize returns to improve the overall financial performance of the company.
Peer comparison
Dec 31, 2024