Hormel Foods Corporation (HRL)
Return on total capital
| Oct 27, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,067,930 | 1,087,530 | 1,340,380 | 1,169,180 | 1,135,540 |
| Long-term debt | US$ in thousands | 2,850,940 | 2,358,720 | 3,290,550 | 3,315,150 | 1,044,940 |
| Total stockholders’ equity | US$ in thousands | 7,993,420 | 7,734,880 | 7,535,280 | 6,972,880 | 6,425,550 |
| Return on total capital | 9.85% | 10.77% | 12.38% | 11.36% | 15.20% |
October 27, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,067,930K ÷ ($2,850,940K + $7,993,420K)
= 9.85%
Hormel Foods Corporation's return on total capital has exhibited a downward trend over the past five years. The return on total capital decreased from 15.20% in October 2020 to 9.85% in October 2024. This suggests a decline in the company's efficiency in generating returns from its total capital employed. The drop in the return on total capital could indicate challenges in maximizing profitability and managing capital effectively. It is essential for Hormel Foods Corporation to assess and address the factors contributing to this decline to improve its overall financial performance and ensure sustainable growth in the future.