Louisiana-Pacific Corporation (LPX)
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 | 574,000 | 269,000 | 1,374,000 | 1,794,000 | 637,000 |
| Long-term debt | US$ in thousands | 348,000 | 347,000 | 346,000 | 346,000 | 348,000 |
| Total stockholders’ equity | US$ in thousands | 1,671,000 | 1,557,000 | 1,433,000 | 1,235,000 | 1,234,000 |
| Return on total capital | 28.43% | 14.13% | 77.23% | 113.47% | 40.27% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $574,000K ÷ ($348,000K + $1,671,000K)
= 28.43%
Based on the data provided for Louisiana-Pacific Corporation's return on total capital over the five-year period from December 31, 2020, to December 31, 2024, there have been fluctuations in the company's performance in utilizing its capital efficiently.
- In December 31, 2020, the return on total capital was reported at 40.27%. This indicates that the company generated a return of 40.27% on all the capital invested in the business during that period.
- The return on total capital significantly increased to 113.47% by December 31, 2021, reflecting a remarkable improvement in capital efficiency. This substantial increase suggests that the company was able to generate a significantly higher return relative to the total capital employed.
- By December 31, 2022, the return on total capital decreased to 77.23%, still at a relatively high level, but showing a decline compared to the previous year. This could be indicative of changing market conditions or shifts in the company's operations.
- The return on total capital further decreased to 14.13% by December 31, 2023, indicating a significant drop in capital efficiency. This decline may raise concerns about the company's ability to generate returns in line with the capital invested.
- Finally, by December 31, 2024, the return on total capital improved to 28.43%, showing a recovery from the previous year but not yet reaching the levels achieved in 2021 and 2022.
Overall, the fluctuations in Louisiana-Pacific Corporation's return on total capital over the five-year period suggest that the company's capital efficiency has been variable, with significant improvements and declines in different years. Monitoring this ratio is essential for assessing the company's ability to generate returns on the total capital employed and its overall financial performance.
Peer comparison
Dec 31, 2024