McCormick & Company Incorporated (MKC)
Return on total capital
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,063,300 | 999,700 | 1,084,600 | 1,057,900 | 1,025,300 |
| Long-term debt | US$ in thousands | 3,339,900 | 3,642,300 | 3,973,300 | 3,753,800 | 3,625,800 |
| Total stockholders’ equity | US$ in thousands | 5,060,700 | 4,680,500 | 4,411,000 | 3,926,100 | 3,444,200 |
| Return on total capital | 12.66% | 12.01% | 12.94% | 13.77% | 14.50% |
November 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,063,300K ÷ ($3,339,900K + $5,060,700K)
= 12.66%
The return on total capital for McCormick & Co., Inc. has shown variability over the past five years. In 2019, the return on total capital was at its highest at 13.12%, indicating efficient utilization of both equity and debt financing to generate profits. However, in the subsequent years, there was a downward trend, with the returns dipping to 12.00% in 2020, 11.79% in 2021, and further down to 9.72% in 2022. The latest available data for November 30, 2023, shows an improvement, with the return on total capital standing at 11.41%.
This trend suggests a fluctuating performance in generating profits from the total capital employed by the company. Further analysis such as the composition of the total capital, allocation of resources, and operating efficiency may provide insights into the factors driving this trend and help assess the company's ability to generate returns for both equity and debt providers.