MSC Industrial Direct Company Inc (MSM)
Return on total capital
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 478,825 | 468,035 | 301,859 | 350,282 | 400,087 |
| Long-term debt | US$ in thousands | 224,165 | 468,728 | 582,428 | 494,565 | 264,225 |
| Total stockholders’ equity | US$ in thousands | 1,479,160 | 1,350,430 | 1,150,870 | 1,314,940 | 1,478,550 |
| Return on total capital | 28.11% | 25.73% | 17.42% | 19.36% | 22.96% |
September 2, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $478,825K ÷ ($224,165K + $1,479,160K)
= 28.11%
Return on total capital is a key financial metric that measures a company's ability to generate earnings relative to the total capital employed in the business. It is an important indicator of how efficiently a company utilizes its capital to generate profits. The trend in MSC Industrial Direct Co., Inc.'s return on total capital over the past five years indicates the company's performance in this area.
In 2023, MSC Industrial Direct Co., Inc. achieved a return on total capital of 25.43%, demonstrating a significant improvement compared to the previous year. This indicates that the company effectively utilized its total capital to generate profits during this period, which can be seen as a positive sign of operational efficiency and financial management.
Looking back over the past five years, the return on total capital has fluctuated, with 2023 marking the highest return over the period. This suggests that MSC Industrial Direct Co., Inc. has been able to effectively manage and deploy its capital resources to create value for shareholders. However, the company's return on total capital was relatively lower in 2021, at 17.50%, compared to the years before and after. This might indicate a period of lower efficiency in capital deployment or a change in the composition of the capital structure during that year.
Overall, the upward trend in the return on total capital for MSC Industrial Direct Co., Inc. suggests that the company has been successful in generating strong returns from the capital invested in its operations. It is important to note that further analysis of the underlying factors contributing to changes in the return on total capital over time, such as profitability, asset utilization, and capital structure, would provide a more comprehensive understanding of the company's financial performance.
Peer comparison
Sep 2, 2023