Northrop Grumman Corporation (NOC)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	4,370,000	2,537,000	3,601,000	5,651,000	4,065,000
Long-term debt	US$ in thousands	14,692,000	13,786,000	11,805,000	12,777,000	14,261,000
Total stockholders’ equity	US$ in thousands	15,290,000	14,795,000	15,312,000	12,926,000	10,579,000
Return on total capital		14.58%	8.88%	13.28%	21.99%	16.36%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $4,370,000K ÷ ($14,692,000K + $15,290,000K)
= 14.58%

The return on total capital for Northrop Grumman Corporation has shown variability over the five-year period from 2020 to 2024.

In 2020, the return on total capital was 16.36%, indicating that for every dollar of total capital employed, the company generated a return of 16.36 cents. This was a decent return, demonstrating efficiency in utilizing its total capital.

The return on total capital improved significantly in 2021 to 21.99%, reflecting improved profitability and effective capital allocation. This suggests that the company was able to generate higher returns on its total capital investment.

However, there was a noticeable decline in the return on total capital in 2022, dropping to 13.28%. This could indicate challenges in maintaining previous levels of profitability or changes in the efficiency of capital utilization.

In 2023, the return on total capital decreased further to 8.88%, reaching a relatively low level compared to previous years. This decline may raise concerns about the company's ability to generate returns on its total invested capital.

The return on total capital saw a slight recovery in 2024, rising to 14.58%. While this uptick is positive, it is important for the company to continue monitoring and improving its efficiency in capital management to sustain or enhance returns for its investors.

Overall, the fluctuation in Northrop Grumman Corporation's return on total capital over the years indicates the importance of closely monitoring the company's financial performance and capital allocation strategies to ensure sustainable profitability and efficient use of resources.