Hillenbrand Inc (HI)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 750,200 | 357,200 | 402,800 | 52,200 | 199,300 |
| Long-term debt | US$ in thousands | 1,990,400 | 1,222,100 | 1,212,900 | 1,516,300 | 619,500 |
| Total stockholders’ equity | US$ in thousands | 1,630,300 | 1,082,900 | 1,209,600 | 1,059,000 | 754,100 |
| Return on total capital | 20.72% | 15.50% | 16.63% | 2.03% | 14.51% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $750,200K ÷ ($1,990,400K + $1,630,300K)
= 20.72%
The return on total capital (ROTC) is a crucial financial ratio that provides insight into a company's efficiency in generating returns from its total invested capital. Analyzing Hillenbrand Inc's ROTC over the past five years reveals valuable trends and performance insights.
In 2023, Hillenbrand Inc's ROTC stands at 8.09%. This represents a noticeable decline from the previous year's ROTC of 16.42%. Such a decrease raises concerns about the company's ability to utilize its total capital effectively to generate returns for its stakeholders. Further investigation into the elements of total capital and the company's profitability is warranted to understand the causes behind this decline.
It's important to compare the current ROTC with previous years to identify long-term trends. Looking back to 2022 and 2021, Hillenbrand Inc demonstrated ROTC figures of 16.42% and 15.49% respectively. These values showcase a relatively stable and favorable performance, indicating the company's historical success in leveraging its total capital for returns.
However, 2020 and 2019 saw ROTC figures of 7.78% and 15.35% respectively. The noticeable decrease in 2020 followed by a substantial increase in 2019 signals potential fluctuations in the company's capital utilization and profitability during those years.
In conclusion, the analysis of Hillenbrand Inc's ROTC indicates fluctuations and downward trends in recent years, with the 2023 figure reflecting a significant decline. Further examination of the company's financial statements and operational performance is necessary to grasp the factors behind these fluctuations and assess the company's ability to effectively utilize its total capital for generating returns.
Peer comparison
Sep 30, 2023