HealthEquity Inc (HQY)

Return on total capital

		Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021	Jan 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	130,495	10,328	-30,169	39,021	67,927
Long-term debt	US$ in thousands	874,972	907,838	922,077	924,217	1,181,620
Total stockholders’ equity	US$ in thousands	2,035,020	1,895,640	1,852,580	1,378,730	1,030,300
Return on total capital		4.48%	0.37%	-1.09%	1.69%	3.07%

January 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $130,495K ÷ ($874,972K + $2,035,020K)
= 4.48%

HealthEquity Inc's return on total capital has shown fluctuating trends over the past five years. In the most recent period ending January 31, 2024, the return on total capital stood at 4.48%, a significant improvement compared to the previous years. This indicates that the company is utilizing its total capital more efficiently to generate profits.

The return on total capital was relatively low in January 2023 at 0.37%, but it turned negative in January 2022 at -1.09%. This negative figure suggests that the company's capital investments were not yielding adequate returns during that period. However, HealthEquity Inc was able to improve its performance in the subsequent years.

In January 2021, the return on total capital was 1.69%, indicating a moderate improvement from the previous year. The company further enhanced its efficiency in January 2020, achieving a return on total capital of 3.07%.

Overall, the improving trend in return on total capital suggests that HealthEquity Inc has been able to enhance its capital efficiency and generate better returns for its investors in recent years. It is crucial for the company to sustain or further improve this trend to ensure long-term financial health and value creation.