Callaway Golf Company (MODG)
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 | -1,257,200 | 245,000 | 284,700 | 466,200 | -80,600 |
| Long-term debt | US$ in thousands | 1,457,900 | 1,518,200 | 1,176,300 | 1,025,300 | 650,564 |
| Total stockholders’ equity | US$ in thousands | 2,407,700 | 3,878,200 | 3,774,300 | 3,682,900 | 675,644 |
| Return on total capital | -32.52% | 4.54% | 5.75% | 9.90% | -6.08% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-1,257,200K ÷ ($1,457,900K + $2,407,700K)
= -32.52%
The Return on Total Capital for Callaway Golf Company has shown fluctuations in the recent years based on the provided data.
1. As of December 31, 2020, the company's Return on Total Capital was -6.08%, indicating that the company's net income generated was insufficient to cover the total invested capital, which is a concerning sign.
2. By December 31, 2021, the Return on Total Capital had improved significantly to 9.90%, suggesting that the company was able to generate a respectable return on its invested capital during that period.
3. However, by December 31, 2022, the Return on Total Capital declined to 5.75%, indicating a decrease in the efficiency of capital utilization compared to the previous year.
4. The trend continued in the following years, with the Return on Total Capital decreasing to 4.54% as of December 31, 2023, and dropping significantly to -32.52% by December 31, 2024, indicating a substantial decline in the company's ability to generate returns on its total capital.
In conclusion, the fluctuating trend in Callaway Golf Company's Return on Total Capital reflects varying levels of efficiency in utilizing capital to generate profits. It is crucial for the company to assess and address the factors contributing to these fluctuations to ensure sustained profitability and effective capital management in the future.
Peer comparison
Dec 31, 2024