Macy’s Inc (M)
Return on total capital
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 294,000 | 1,693,000 | 2,122,000 | -4,506,000 | 933,000 |
| Long-term debt | US$ in thousands | 2,706,000 | 2,555,000 | 3,254,000 | — | — |
| Total stockholders’ equity | US$ in thousands | 4,137,000 | 4,082,000 | 3,621,000 | 2,553,000 | 6,377,000 |
| Return on total capital | 4.30% | 25.51% | 30.87% | -176.50% | 14.63% |
February 3, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $294,000K ÷ ($2,706,000K + $4,137,000K)
= 4.30%
Over the past five years, Macy's Inc has seen fluctuations in its return on total capital, a key financial metric that indicates the efficiency of the company in generating profits from its total capital employed.
In 2024, Macy's return on total capital stood at 4.30%, reflecting a lower level of profitability compared to the previous years. This could be a signal of reduced efficiency in utilizing its capital resources to generate earnings.
The significant drop in return on total capital in 2021, where it plummeted to -176.50%, indicates a substantial loss-making period for Macy's. This negative return implies that the company's capital investments were not yielding returns and could be attributed to various factors such as operational inefficiencies, financial challenges, or economic downturns.
However, there was a notable recovery in 2022 and 2023, with return on total capital increasing to 30.87% and 25.51% respectively. These years reflect a period of improved profitability for Macy's, suggesting better utilization of capital and stronger financial performance.
Looking at the trend, it is essential for Macy's to closely monitor its return on total capital to ensure sustainable profitability and efficient capital deployment in the future. A consistent focus on optimizing capital utilization and operational performance will be crucial for driving long-term value for the company and its stakeholders.
Peer comparison
Feb 3, 2024