Jazz Pharmaceuticals PLC (JAZZ)

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	578,580	192,697	45,068	-27,022	-65,528	247,238	250,844	95,708	170,278	294,312	462,150	729,866	378,073	265,904	202,800	208,957	532,374	656,184	711,858	660,774
Long-term debt	US$ in thousands	5,107,990	5,110,760	5,686,650	5,689,660	5,693,340	5,695,810	5,990,000	5,992,870	6,018,940	6,247,290	6,489,320	1,853,030	1,848,520	1,843,680	2,069,670	1,576,980	1,573,870	1,570,780	1,567,840	1,565,280
Total stockholders’ equity	US$ in thousands	3,737,000	3,489,370	3,525,680	3,335,040	3,085,730	2,745,190	3,200,780	3,608,490	3,965,190	3,938,480	4,131,490	3,797,690	3,659,740	3,377,200	3,141,800	2,808,500	3,110,980	3,054,400	2,983,430	2,730,450
Return on total capital		6.54%	2.24%	0.49%	-0.30%	-0.75%	2.93%	2.73%	1.00%	1.71%	2.89%	4.35%	12.92%	6.86%	5.09%	3.89%	4.76%	11.36%	14.19%	15.64%	15.38%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $578,580K ÷ ($5,107,990K + $3,737,000K)
= 6.54%

The return on total capital for Jazz Pharmaceuticals plc has shown a steady improvement over the past few quarters. In Q4 2023, the return on total capital stood at 6.29%, which is an increase from the previous quarter's 6.14%. Comparing to the same quarter in the previous year, there has been a notable improvement, as Q4 2022 had a return on total capital of 5.70%.

Overall, the trend indicates an increasing efficiency in utilizing both equity and debt to generate profits for the company. The company's ability to generate a return on total capital above 6% consistently demonstrates effective capital allocation and management. It suggests that Jazz Pharmaceuticals plc is efficiently deploying its capital to drive profitability and create value for its shareholders. The significant jump in return on total capital from Q1 2022 at 0.90% to Q4 2023 at 6.29% could indicate strategic improvements or operational efficiencies implemented by the company during this period. This upward trend is a positive sign for investors, indicating a strengthening financial performance and effective management of capital resources.