Organon & Co (OGN)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,200,000	1,197,000	1,373,000	1,372,000	1,544,000	1,648,000	1,745,000	1,855,000	1,787,000
Long-term debt	US$ in thousands	8,751,000	8,646,000	8,722,000	8,703,000	8,905,000	8,691,000	8,884,000	9,085,000	9,125,000	9,259,000	9,309,000	—
Total stockholders’ equity	US$ in thousands	-70,000	-589,000	-555,000	-737,000	-892,000	-1,066,000	-1,137,000	-1,250,000	-1,508,000	-1,618,000	-1,934,000	4,722,000
Return on total capital		13.82%	14.86%	16.81%	17.22%	19.27%	21.61%	22.52%	23.68%	23.46%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,200,000K ÷ ($8,751,000K + $-70,000K)
= 13.82%

Organon & Co.'s return on total capital has shown a declining trend over the past quarters, starting from 24.02% in Q1 2022 to 15.27% in Q4 2023. This indicates a decrease in the company's ability to generate returns from its total capital employed. While the return on total capital was relatively high in the earlier quarters of 2022, it has since been on a downward trajectory.

The decreasing trend in return on total capital may raise concerns about the company's efficiency in utilizing its total capital to generate profits. It is important for Organon & Co. to closely monitor and address the factors contributing to this decline to ensure sustainable and optimal financial performance in the future.