International Paper (IP)
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 | 577,000 | 767,000 | 1,883,000 | 1,428,000 | 925,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 8,173,000 | 8,355,000 | 8,497,000 | 9,082,000 | 7,854,000 |
| Return on total capital | 7.06% | 9.18% | 22.16% | 15.72% | 11.78% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $577,000K ÷ ($—K + $8,173,000K)
= 7.06%
International Paper's return on total capital has shown fluctuations over the past five years. It stood at 11.78% as of December 31, 2020, and steadily increased to 15.72% by December 31, 2021. The return peaked at 22.16% on December 31, 2022, reflecting a significant improvement in capital efficiency.
However, the return on total capital saw a decline in the following years, dropping to 9.18% by December 31, 2023, and further decreasing to 7.06% by December 31, 2024. This downward trend indicates a potential decrease in the company's ability to generate returns relative to the total capital employed.
It is important for stakeholders to closely monitor International Paper's capital allocation strategies and operational effectiveness to ensure sustainable returns on total capital in the future. The fluctuating performance in this ratio may suggest varying levels of profitability and efficiency within the company's operations.
Peer comparison
Dec 31, 2024