KAR Auction Services Inc (KAR)

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	179,700	9,300	157,800	127,500	134,300
Long-term debt	US$ in thousands	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	1,342,700	1,939,500	2,130,800	2,103,900	2,165,600
Return on total capital		13.38%	0.48%	7.41%	6.06%	6.20%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $179,700K ÷ ($—K + $1,342,700K)
= 13.38%

Based on the provided data, KAR Auction Services Inc's return on total capital has exhibited fluctuations over the past five years.

As of December 31, 2020, the return on total capital stood at 6.20%, indicating that the company generated a 6.20% return on the total capital invested in its operations. By December 31, 2021, the return on total capital slightly declined to 6.06%, suggesting a slight decrease in the efficiency of capital utilization.

However, there was a notable improvement in performance by December 31, 2022, with the return on total capital rising to 7.41%, showcasing a more effective use of capital to generate returns. The following year, by December 31, 2023, the return on total capital dropped significantly to 0.48%, indicating a substantial decrease in capital efficiency.

Nevertheless, by December 31, 2024, KAR Auction Services Inc's return on total capital experienced a remarkable rebound, reaching 13.38%. This surge in return on total capital suggests that the company effectively maximized the returns generated from the total capital employed, potentially indicating improved operational efficiency and profitability.

Overall, the fluctuation in KAR Auction Services Inc's return on total capital over the past five years highlights the variability in the company's capital utilization and efficiency in generating returns for its investors.