WW Grainger Inc (GWW)
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 | 2,653,000 | 2,565,000 | 2,204,000 | 1,552,000 | 1,040,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 3,703,000 | 3,115,000 | 2,735,000 | 2,160,000 | 2,093,000 |
| Return on total capital | 71.64% | 82.34% | 80.59% | 71.85% | 49.69% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,653,000K ÷ ($—K + $3,703,000K)
= 71.64%
WW Grainger Inc's return on total capital has shown a strong increasing trend over the past five years. Starting at 49.69% as of December 31, 2020, the return on total capital has consistently improved to reach 71.85% in 2021, 80.59% in 2022, 82.34% in 2023, and then slightly decreased to 71.64% by December 31, 2024.
This upward trajectory indicates that WW Grainger Inc has been effectively utilizing its total capital to generate higher returns for its investors. The significant increase in return on total capital from 2020 to 2024 suggests that the company has been efficient in deploying its financial resources to generate profits.
However, the slight decrease in return on total capital in 2024 compared to the previous year may warrant further investigation to understand the factors contributing to this decline and whether it is a temporary fluctuation or a sign of potential challenges in capital efficiency. Overall, the trend in return on total capital reflects positively on WW Grainger Inc's financial performance and capital management strategies.