Neogen Corporation (NEOG)
Return on total capital
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 5,212 | 58,618 | 74,169 | 67,523 | 68,094 |
| Long-term debt | US$ in thousands | 885,439 | 0 | — | — | — |
| Total stockholders’ equity | US$ in thousands | 3,134,220 | 887,374 | 840,377 | 725,177 | 637,899 |
| Return on total capital | 0.13% | 6.61% | 8.83% | 9.31% | 10.67% |
May 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $5,212K ÷ ($885,439K + $3,134,220K)
= 0.13%
Neogen Corp.'s return on total capital has shown a declining trend over the past five years. The return on total capital decreased from 10.70% in 2019 to 0.93% in 2023. This indicates a decrease in the company's ability to generate profit relative to its total capital employed. The declining trend may suggest inefficiency in the utilization of the company's capital resources or a decrease in profitability over the years. Further analysis of the company's financial performance, capital structure, and profitability drivers may be necessary to understand the factors contributing to this decline in return on total capital.
Peer comparison
May 31, 2023