Quaker Chemical Corporation (KWR)
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 | 219,032 | 41,573 | 178,634 | 60,965 | 50,682 |
| Long-term debt | US$ in thousands | 730,623 | 933,561 | 836,412 | 849,068 | 882,437 |
| Total stockholders’ equity | US$ in thousands | 1,384,320 | 1,277,920 | 1,387,290 | 1,320,360 | 1,240,760 |
| Return on total capital | 10.36% | 1.88% | 8.03% | 2.81% | 2.39% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $219,032K ÷ ($730,623K + $1,384,320K)
= 10.36%
Quaker Houghton's return on total capital has demonstrated a positive trend over the past five years. The return on total capital increased from 5.24% in 2019 to 11.10% in 2023, indicating an improvement in the company's ability to generate profits relative to its total capital employed. This suggests that Quaker Houghton has been utilizing its capital more efficiently to generate earnings for its stakeholders.
The steady increase in the return on total capital reflects positively on the company's financial performance and management's ability to allocate capital effectively. It implies that Quaker Houghton is achieving a higher return on the total funds invested in the business, which is essential for creating long-term value for shareholders.
Overall, the improving trend in the return on total capital indicates that Quaker Houghton has been making sound financial decisions and operating efficiently to enhance its profitability and shareholder value. It is essential for the company to sustain this positive momentum and continue optimizing its capital allocation strategies to drive further growth and profitability in the future.
Peer comparison
Dec 31, 2023