Healthcare Services Group Inc (HCSG)
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 | -169,329 | -129,092 | -138,565 | -48,884 | 88,555 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 456,616 | 418,279 | 452,677 | 480,461 | 460,305 |
| Return on total capital | -37.08% | -30.86% | -30.61% | -10.17% | 19.24% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-169,329K ÷ ($—K + $456,616K)
= -37.08%
Healthcare Services Group, Inc.'s return on total capital has shown variability over the past five years. The ratio decreased from 16.56% in 2019 to 24.39% in 2020, indicating a significant improvement in capital utilization. However, there was a decline in 2021 to 11.88%, followed by a slight decrease to 11.86% in 2022. In 2023, the return on total capital further dropped to 9.96%.
This trend suggests that the company's efficiency in generating returns from its total capital has been fluctuating. A declining return on total capital may indicate that the company is not effectively utilizing its capital to generate profits, which could be a cause for concern. Further analysis and investigation into the factors driving this trend would be necessary to understand the underlying reasons for the decreasing returns and to implement strategies to improve capital utilization efficiency.