NorthWestern Corporation (NWE)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | ||
|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 323,321 | 334,788 | 322,485 |
| Long-term debt | US$ in thousands | 2,695,340 | 2,567,940 | 2,569,550 |
| Total stockholders’ equity | US$ in thousands | 2,857,700 | 2,816,460 | 2,807,260 |
| Return on total capital | 5.82% | 6.22% | 6.00% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $323,321K ÷ ($2,695,340K + $2,857,700K)
= 5.82%
Return on total capital is a key financial ratio that measures a company's efficiency in generating returns from all of its invested capital. In the case of NorthWestern Corporation, the return on total capital for the quarters ending June 30, 2024, September 30, 2024, and December 31, 2024, were 6.00%, 6.22%, and 5.82%, respectively.
The trend in NorthWestern Corporation's return on total capital shows some fluctuation over the three quarters analyzed. The return on total capital peaked in September 30, 2024, at 6.22% before slightly decreasing to 5.82% by December 31, 2024.
While a return on total capital of 6.00% to 6.22% indicates that NorthWestern Corporation is generating a positive return from its total invested capital, the decrease to 5.82% in the most recent quarter may raise some concerns. It is essential for the company to continuously monitor and improve its efficiency in utilizing capital to ensure sustainable profitability and value creation for its shareholders.
Overall, further analysis of NorthWestern Corporation's operational performance, capital structure, and profitability drivers may provide more insights into the factors influencing its return on total capital and help identify areas for potential improvement.
Peer comparison
Dec 31, 2024