WW Grainger Inc (GWW)
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 | 2,565,000 | 2,215,000 | 1,547,000 | 1,019,000 | 1,262,000 |
| Long-term debt | US$ in thousands | 2,266,000 | 2,284,000 | 2,362,000 | 2,389,000 | 1,914,000 |
| Total stockholders’ equity | US$ in thousands | 3,115,000 | 2,440,000 | 1,874,000 | 1,828,000 | 1,855,000 |
| Return on total capital | 47.67% | 46.89% | 36.52% | 24.16% | 33.48% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,565,000K ÷ ($2,266,000K + $3,115,000K)
= 47.67%
The return on total capital for W.W. Grainger Inc. has shown a generally positive trend over the past five years, indicating an improving ability of the company to generate earnings relative to its total capital employed. The return on total capital increased from 31.01% in 2019 to 47.37% in 2023, reflecting a substantial improvement in profitability and efficiency in utilizing its capital.
The consistently high return on total capital figures, particularly in the recent years, suggest that W.W. Grainger Inc. has been effectively leveraging its capital investments to generate higher returns for its shareholders. This could indicate strong management of operations and effective allocation of resources within the company.
Overall, the upward trend in the return on total capital metric for W.W. Grainger Inc. highlights the company's ability to generate value from its investments and operations, which may be viewed positively by investors and stakeholders.