MP Materials Corp (MP)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 38,329 | 346,938 | 169,099 | -34,452 |
| Long-term debt | US$ in thousands | 681,980 | 678,444 | 674,927 | 961 |
| Total stockholders’ equity | US$ in thousands | 1,365,780 | 1,312,630 | 1,008,730 | 853,877 |
| Return on total capital | 1.87% | 17.42% | 10.04% | -4.03% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $38,329K ÷ ($681,980K + $1,365,780K)
= 1.87%
The return on total capital for MP Materials Corporation has been fluctuating over the past four years. In 2020, the return on total capital was at 3.71%, indicating a moderate level of profitability relative to the total capital employed. This metric increased significantly in 2021 to 9.83%, showcasing an improvement in the company's ability to generate returns from its capital investments.
However, in 2022, there was a substantial jump in the return on total capital to 16.46%, suggesting a notable increase in the efficiency of capital utilization and higher profitability for the company.
The return on total capital then declined sharply in 2023 to -0.87%, indicating that the company may have faced challenges in generating returns relative to the total capital employed during that year.
Overall, MP Materials Corporation's return on total capital has displayed variability over the years, with notable improvements in profitability in 2021 and 2022, but a decline in 2023. Further analysis of the underlying factors contributing to these fluctuations is recommended to gain a deeper understanding of the company's financial performance.
Peer comparison
Dec 31, 2023