International Paper (IP)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 768,000 | 1,671,000 | 2,370,000 | 1,255,000 | 2,403,000 |
| Long-term debt | US$ in thousands | 5,455,000 | 4,816,000 | 5,383,000 | 8,042,000 | 9,597,000 |
| Total stockholders’ equity | US$ in thousands | 8,355,000 | 8,497,000 | 9,082,000 | 7,854,000 | 7,713,000 |
| Return on total capital | 5.56% | 12.55% | 16.38% | 7.90% | 13.88% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $768,000K ÷ ($5,455,000K + $8,355,000K)
= 5.56%
The Return on Total Capital for International Paper Co. has shown a fluctuating trend over the past five years. In 2023, the return decreased to 4.64% from 10.80% in 2022, marking a significant decline. This decrease may indicate potential challenges in effectively utilizing the company's total capital to generate profits or operational inefficiencies.
Comparing the 2023 return to the previous years, it is also lower than the returns of 10.61% in 2021, 8.70% in 2020, and 12.33% in 2019. This downward trend over the years suggests a potential long-term issue with the company's ability to generate returns on the total capital invested.
Further analysis and investigation into the factors contributing to this decline in return on total capital are necessary to identify underlying issues and develop strategies to improve the company's capital utilization and profitability in the future.
Peer comparison
Dec 31, 2023