Magnolia Oil & Gas Corp (MGY)

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	534,485	1,073,790	602,594	-1,925,670	127,502
Long-term debt	US$ in thousands	392,839	390,383	388,087	391,115	389,835
Total stockholders’ equity	US$ in thousands	1,691,650	1,576,030	816,733	548,136	1,776,020
Return on total capital		25.64%	54.61%	50.02%	-205.02%	5.89%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $534,485K ÷ ($392,839K + $1,691,650K)
= 25.64%

The return on total capital for Magnolia Oil & Gas Corp has fluctuated over the past five years. In 2019, the return on total capital was 5.89%, indicating a moderate level of profitability. This figure decreased significantly in 2020 to -205.02%, which suggests that the company's capital employed was not generating positive returns during that year.

However, there was a substantial improvement in 2021, with the return on total capital increasing to 50.02%. This sharp rise implies that the company was able to significantly enhance its profitability by effectively utilizing its capital resources. The trend continued in 2022, with a return on total capital of 54.61%, reaching a peak in recent years.

In 2023, the return on total capital declined to 25.64%, indicating a decrease in profitability compared to the previous year. Despite this drop, the company still managed to achieve a respectable return on its total capital.

Overall, Magnolia Oil & Gas Corp's return on total capital has shown variability over the past five years, with significant fluctuations. The positive trend in 2021 and 2022 reflects improved capital efficiency and profitability, while the negative result in 2020 highlights a challenging year for the company. Monitoring this ratio closely can provide insights into the company's ability to generate returns relative to its total capital employed.