ServiceNow Inc (NOW)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 762,000 | 426,000 | 277,000 | 183,000 | 100,000 |
| Long-term debt | US$ in thousands | 1,488,000 | 1,486,000 | 1,484,000 | 1,640,000 | 694,981 |
| Total stockholders’ equity | US$ in thousands | 7,628,000 | 5,032,000 | 3,695,000 | 2,834,000 | 2,127,000 |
| Return on total capital | 8.36% | 6.54% | 5.35% | 4.09% | 3.54% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $762,000K ÷ ($1,488,000K + $7,628,000K)
= 8.36%
ServiceNow Inc's return on total capital has shown a consistent upward trend over the past five years, increasing from 1.49% in 2019 to 8.36% in 2023. This indicates that the company has been able to generate a higher return on the total capital employed in its operations. The substantial improvement in the return on total capital reflects the company's efficient utilization of capital to generate profits. This trend suggests a positive outlook for the company's financial performance and indicates that its management is effectively deploying its capital to create shareholder value. The increasing return on total capital is a positive signal for investors and stakeholders, as it demonstrates the company's ability to generate higher profits relative to the total capital invested.
Peer comparison
Dec 31, 2023