3M Company (MMM)
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 | -8,744,000 | 6,851,000 | 7,694,000 | 7,315,000 | 6,079,000 |
| Long-term debt | US$ in thousands | 13,088,000 | 14,001,000 | 16,056,000 | 17,989,000 | 17,518,000 |
| Total stockholders’ equity | US$ in thousands | 4,807,000 | 14,722,000 | 15,046,000 | 12,867,000 | 10,063,000 |
| Return on total capital | -48.86% | 23.85% | 24.74% | 23.71% | 22.04% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-8,744,000K ÷ ($13,088,000K + $4,807,000K)
= -48.86%
The return on total capital for 3M Co. has experienced fluctuations over the past five years. In 2023, the return on total capital was -43.76%, indicating that the company incurred a negative return on the total capital employed during that period. This sharp decline from the positive returns in the previous years could be a cause for concern as it suggests that the company's capital investments may not have been yielding favorable returns.
In contrast, in 2022, 3M Co. achieved a return on total capital of 13.33%, which was a significant increase from the previous year. This improvement indicates that the company was able to generate a positive return on the total capital invested, signaling favorable business performance. Similarly, in 2021, the return on total capital further increased to 22.70%, demonstrating continued efficiency in utilizing capital to generate profits.
The return on total capital remained relatively stable in 2020 and 2019, at 21.31% and 19.88% respectively. These consistent positive returns suggest that 3M Co. has been effectively leveraging its total capital to generate profits over the years, reflecting a sound financial performance.
Overall, the fluctuations in the return on total capital for 3M Co. highlight the importance of closely monitoring the company's capital allocation and investment strategies to ensure sustainable and profitable operations in the long run.
Peer comparison
Dec 31, 2023