Illinois Tool Works Inc (ITW)
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 | 4,040,000 | 3,790,000 | 3,477,000 | 2,882,000 | 3,402,000 |
| Long-term debt | US$ in thousands | 6,339,000 | 6,173,000 | 6,909,000 | 7,772,000 | 7,754,000 |
| Total stockholders’ equity | US$ in thousands | 3,012,000 | 3,088,000 | 3,625,000 | 3,181,000 | 3,026,000 |
| Return on total capital | 43.20% | 40.92% | 33.01% | 26.31% | 31.56% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $4,040,000K ÷ ($6,339,000K + $3,012,000K)
= 43.20%
Illinois Tool Works, Inc. has shown a consistent upward trend in its return on total capital over the five-year period from 2019 to 2023. The return on total capital increased from 31.55% in 2019 to 36.15% in 2023, indicating improving efficiency in generating profits from both equity and debt capital employed in the business.
This steady improvement suggests that Illinois Tool Works, Inc. has been effectively utilizing its total capital to generate returns for its stakeholders. The company's ability to consistently generate higher returns on total capital reflects strong operational performance and effective capital allocation strategies.
The increasing trend in return on total capital indicates that Illinois Tool Works, Inc. is creating significant value for its investors by efficiently utilizing its resources to generate profits. This positive trajectory suggests that the company is effectively managing its capital structure and operating efficiently to maximize returns for its shareholders.
Peer comparison
Dec 31, 2023