Lithia Motors Inc (LAD)

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	1,692,600	1,720,500	1,770,100	1,813,400	1,941,100	2,039,000	2,003,600	1,930,800	1,662,400	1,394,700	1,154,800	838,200	692,800	584,900	492,100	479,300	495,000	479,400	470,200	461,900
Long-term debt	US$ in thousands	—	—	—	—	—	2,721,600	2,479,900	2,543,500	2,545,200	2,233,000	2,653,200	1,958,300	1,964,800	1,305,900	1,223,700	1,179,000	1,166,600	752,200	756,500	741,800
Total stockholders’ equity	US$ in thousands	6,213,900	5,996,400	5,755,600	5,437,300	5,206,200	4,983,700	4,691,900	4,904,400	4,626,400	4,542,700	4,228,400	2,807,600	2,661,500	1,694,400	1,532,200	1,456,500	1,467,700	1,359,200	1,274,700	1,250,500
Return on total capital		27.24%	28.69%	30.75%	33.35%	37.28%	26.46%	27.94%	25.92%	23.18%	20.58%	16.78%	17.59%	14.98%	19.49%	17.86%	18.19%	18.79%	22.71%	23.15%	23.18%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,692,600K ÷ ($—K + $6,213,900K)
= 27.24%

Lithia Motors, Inc.'s return on total capital has shown a decreasing trend over the last eight quarters, decreasing from 19.50% in Q1 2022 to 9.89% in Q4 2023. This decline indicates a diminishing ability of the company to generate profits from its total capital employed. While it is essential to consider the industry and economic factors that may have influenced these results, the consistent decrease in the return on total capital warrants attention from stakeholders and management. Further analysis and investigation into the factors contributing to this decline are crucial to identify potential areas for improvement and strategic decision-making.