Monolithic Power Systems Inc (MPWR)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Mar 31, 2019	Dec 31, 2018
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	481,736	509,059	525,364	554,927	526,785	468,465	393,725	312,465	262,417	223,807	206,655	173,982	158,882	149,614	119,667	113,429	115,520	118,319	113,169	113,489
Long-term debt	US$ in thousands	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	2,049,940	1,944,860	1,839,090	1,776,260	1,668,600	1,530,710	1,423,120	1,326,110	1,243,980	1,162,710	1,087,360	1,021,580	966,587	914,569	848,945	813,190	773,491	734,428	680,251	640,093
Return on total capital		23.50%	26.17%	28.57%	31.24%	31.57%	30.60%	27.67%	23.56%	21.09%	19.25%	19.01%	17.03%	16.44%	16.36%	14.10%	13.95%	14.93%	16.11%	16.64%	17.73%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $481,736K ÷ ($—K + $2,049,940K)
= 23.50%

The return on total capital for Monolithic Power System Inc has been showing a decreasing trend over the past eight quarters. From Q1 2022 to Q4 2023, the return on total capital decreased from 24.02% to 23.50%, indicating a slight decline in the company's ability to generate returns relative to the amount of capital employed. Despite fluctuations quarter to quarter, the return on total capital has generally remained within a range of 23.50% to 32.05%.

These results suggest that the company may need to reassess its capital allocation strategies to improve the efficiency of its capital utilization. Further analysis of the factors contributing to the fluctuations in return on total capital could provide valuable insights into areas where the company can optimize its operations to enhance returns for shareholders.