International Paper (IP)
Return on total capital
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 757,000 | 915,000 | 1,089,000 | 1,445,000 | 1,671,000 | 1,935,000 | 2,436,000 | 2,341,000 | 2,370,000 | 2,431,000 | 1,806,000 | 1,700,000 | 1,255,000 | 1,441,000 | 1,697,000 | 1,805,000 | 2,403,000 | 2,615,000 | 2,786,000 | 2,907,000 |
| Long-term debt | US$ in thousands | 5,455,000 | — | — | — | 4,816,000 | — | — | — | 5,383,000 | — | 2,200,000 | 2,100,000 | 8,042,000 | 2,120,000 | 9,432,000 | 2,087,000 | 9,597,000 | 9,957,000 | 10,050,000 | 9,965,000 |
| Total stockholders’ equity | US$ in thousands | 8,355,000 | 8,882,000 | 8,404,000 | 8,389,000 | 8,497,000 | 9,488,000 | 9,043,000 | 8,887,000 | 9,082,000 | 9,622,000 | 8,352,000 | 7,758,000 | 7,854,000 | 7,093,000 | 7,057,000 | 6,857,000 | 7,713,000 | 7,441,000 | 7,482,000 | 7,446,000 |
| Return on total capital | 5.48% | 10.30% | 12.96% | 17.22% | 12.55% | 20.39% | 26.94% | 26.34% | 16.38% | 25.27% | 17.12% | 17.24% | 7.90% | 15.64% | 10.29% | 20.18% | 13.88% | 15.03% | 15.89% | 16.70% |
December 31, 2023 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $757,000K ÷ ($5,455,000K + $8,355,000K)
= 5.48%
Over the last eight quarters, International Paper Co.'s return on total capital has exhibited some fluctuations. The return on total capital ranged from a low of 4.64% in Q4 2023 to a high of 10.88% in Q2 2022. In general, the return on total capital has been trending downwards, with Q2 2023 to Q4 2023 showing a gradual decline in performance.
The return on total capital provides insight into the efficiency of the company in generating returns from its total capital employed. A higher return on total capital indicates that the company is utilizing its capital more effectively to generate profits for its stakeholders.
It is worth noting that the return on total capital of International Paper Co. has been relatively stable above 10% in the earlier quarters of 2022, but has dipped below this level in the recent quarters. This suggests a potential decline in the company's profitability and efficiency in utilizing its total capital. The management may need to focus on improving operational efficiency and profitability to enhance the return on total capital in the upcoming quarters.
Peer comparison
Dec 31, 2023