Nordson Corporation (NDSN)
Return on total capital
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 674,844 | 671,692 | 599,667 | 333,649 | 478,249 |
| Long-term debt | US$ in thousands | 1,621,390 | 345,320 | 781,709 | 1,067,950 | 1,075,400 |
| Total stockholders’ equity | US$ in thousands | 2,598,060 | 2,294,380 | 2,159,130 | 1,758,990 | 1,581,040 |
| Return on total capital | 15.99% | 25.45% | 20.39% | 11.80% | 18.00% |
October 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $674,844K ÷ ($1,621,390K + $2,598,060K)
= 15.99%
To analyze the return on total capital for Nordson Corp., we can observe a trend over the last five years. The return on total capital measures the efficiency with which the company generates profits from its total capital, including both debt and equity.
We can note a fluctuating pattern in Nordson Corp.'s return on total capital over the past five years. In 2023, the return on total capital decreased to 15.46% from 23.04% in 2022. This decline indicates a reduction in the company's ability to generate returns from its total capital.
Comparing the return on total capital for 2023 to the levels in 2021 and 2020, the recent figure is higher, signifying an improvement in the company's efficiency in utilizing its total capital to generate returns.
Although the obtained return on total capital for 2023 is lower compared to 2022, it remains within a reasonable range and indicates that Nordson Corp. is still capable of generating profits relative to its invested capital. Further investigation into the company's financial structure and operational performance would provide additional insights into the factors influencing this trend.
Peer comparison
Oct 31, 2023