Southwest Airlines Company (LUV)
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 | 224,000 | 1,017,000 | 1,721,000 | -3,816,000 | 3,075,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 10,515,000 | 10,687,000 | 10,414,000 | 8,876,000 | 9,832,000 |
| Return on total capital | 2.13% | 9.52% | 16.53% | -42.99% | 31.28% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $224,000K ÷ ($—K + $10,515,000K)
= 2.13%
Southwest Airlines Co's return on total capital has fluctuated significantly over the past five years. In 2023, the return on total capital was relatively low at 1.21%, indicating that the company generated a modest return on the total capital employed in its operations. This was a decrease from the previous year's return of 5.42%, suggesting a decline in the efficiency of capital utilization.
In 2021, the return on total capital was negative at -5.86%, indicating that the company experienced losses relative to the capital invested. This was a significant improvement from 2020 when the return on total capital was -24.90%, reflecting a recovery in financial performance.
The most notable performance in recent years was in 2019 when Southwest Airlines Co achieved a high return on total capital of 23.66%, indicating strong profitability and efficient capital utilization. Overall, the company's return on total capital has been volatile, reflecting fluctuations in financial performance and efficiency in deploying capital resources.
Peer comparison
Dec 31, 2023