Innospec Inc (IOSP)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	177,900	161,600	187,300	132,100	33,700
Long-term debt	US$ in thousands	—	—	—	—	0
Total stockholders’ equity	US$ in thousands	1,211,200	1,147,100	1,038,000	1,032,400	944,400
Return on total capital		14.69%	14.09%	18.04%	12.80%	3.57%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $177,900K ÷ ($—K + $1,211,200K)
= 14.69%

Innospec Inc's return on total capital has shown a positive trend over the years, increasing from 3.57% as of December 31, 2020, to 14.69% as of December 31, 2024. This indicates that the company has been more efficient in generating returns relative to its total capital employed.

The significant improvement in return on total capital from 2020 to 2024 suggests that Innospec Inc has been able to effectively utilize its capital to generate profits. However, there was a peak in 2022 with a return on total capital of 18.04%, followed by a slight decrease in 2023 to 14.09%.

Overall, the upward trend in return on total capital demonstrates the company's management effectiveness in deploying its resources to generate value for its shareholders. Improving this ratio over time is a positive sign for investors as it indicates increasing profitability and efficiency in the allocation of capital within the organization.