Meta Platforms Inc. (META)
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 | 47,874,000 | 28,944,000 | 46,753,000 | 32,671,000 | 24,832,000 |
| Long-term debt | US$ in thousands | 18,385,000 | 9,923,000 | 0 | — | — |
| Total stockholders’ equity | US$ in thousands | 153,168,000 | 125,713,000 | 124,879,000 | 128,290,000 | 101,054,000 |
| Return on total capital | 27.91% | 21.34% | 37.44% | 25.47% | 24.57% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $47,874,000K ÷ ($18,385,000K + $153,168,000K)
= 27.91%
Meta Platforms Inc has demonstrated a varying trend in its return on total capital in recent years. The return on total capital was 27.25% at the end of 2023, indicating that, for every dollar of total capital employed, the company generated a profit of 27.25 cents. This represents an increase from the previous year's return of 21.34% in 2022.
Looking further back, the return on total capital was 37.44% in 2021, showing a decline from the peak in 2021. It then decreased further to 25.47% in 2020, before slightly improving to 23.67% in 2019.
The positive trend in return on total capital in recent years suggests that Meta Platforms Inc has been effectively utilizing its capital to generate profits. However, the fluctuations in the ratio indicate that the company's profitability and efficiency in capital allocation have varied over the years, which may warrant further investigation into the underlying factors driving these changes.
Peer comparison
Dec 31, 2023