Meta Platforms Inc. (META)

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 69,380,000 47,874,000 28,944,000 46,753,000 32,671,000
Long-term debt US$ in thousands 28,826,000 18,385,000 9,923,000 0 —
Total stockholders’ equity US$ in thousands 182,637,000 153,168,000 125,713,000 124,879,000 128,290,000
Return on total capital 32.81% 27.91% 21.34% 37.44% 25.47%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $69,380,000K ÷ ($28,826,000K + $182,637,000K)
= 32.81%

Analyzing Meta Platforms Inc.'s return on total capital over the past five years reveals fluctuations in the company's efficiency in generating returns from its overall capital base.

As of December 31, 2020, the return on total capital stood at 25.47%, indicating that for every dollar of total capital invested, Meta Platforms generated approximately $0.25 in profit. Subsequently, there was a notable improvement by December 31, 2021, with the return on total capital increasing to 37.44%, signifying enhanced capital utilization and profitability.

However, in the following year, by December 31, 2022, the return on total capital declined to 21.34%, suggesting a decrease in the company's ability to generate profits relative to its total capital employed. This trend was reversed by December 31, 2023, with the return on total capital rebounding to 27.91%, indicating improved efficiency in capital allocation.

The most recent data point, as of December 31, 2024, shows a return on total capital of 32.81%, reflecting a strong performance in converting capital into profits.

Overall, Meta Platforms Inc.'s return on total capital has demonstrated variability over the past five years, with fluctuations possibly influenced by changes in the company's operational efficiency, investment strategies, and overall business performance. Further analysis and context would be needed to fully understand the factors driving these fluctuations and to assess the company's long-term sustainability and competitiveness.