Mercury Systems Inc (MRCY)
Return on total capital
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -154,260 | -23,383 | 24,201 | 78,395 | 94,939 |
| Long-term debt | US$ in thousands | 591,500 | 511,500 | 451,500 | 200,000 | 0 |
| Total stockholders’ equity | US$ in thousands | 1,472,780 | 1,566,680 | 1,537,180 | 1,484,150 | 1,384,780 |
| Return on total capital | -7.47% | -1.13% | 1.22% | 4.65% | 6.86% |
June 30, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-154,260K ÷ ($591,500K + $1,472,780K)
= -7.47%
Mercury Systems Inc's return on total capital has been declining over the past five years, from 6.86% in 2020 to -7.47% in 2024. This indicates that the company's ability to generate earnings from its total capital has been deteriorating. The negative returns in the most recent years suggest that the company's capital utilization efficiency may have weakened significantly. Management should closely examine the factors contributing to this decline and implement strategies to improve the return on total capital in order to enhance long-term profitability and sustainability.
Peer comparison
Jun 30, 2024