Ovintiv Inc (OVV)
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 | 1,763,000 | 2,865,000 | 3,871,000 | 1,579,000 | -5,359,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 10,331,000 | 10,370,000 | 7,689,000 | 5,074,000 | 3,837,000 |
| Return on total capital | 17.07% | 27.63% | 50.34% | 31.12% | -139.67% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,763,000K ÷ ($—K + $10,331,000K)
= 17.07%
Based on the data provided, Ovintiv Inc's return on total capital has shown significant fluctuations over the past few years.
- As of December 31, 2020, Ovintiv Inc had a negative return on total capital of -139.67%, indicating that the company's capital utilization was inefficient and resulted in a substantial loss.
- However, the company significantly improved its performance by the end of December 31, 2021, achieving a return on total capital of 31.12%. This indicates a turnaround in capital efficiency and a positive return generated on the total capital employed.
- Ovintiv Inc continued to enhance its capital utilization in the following years, with return on total capital increasing to 50.34% as of December 31, 2022, showcasing a robust performance in generating earnings relative to the total capital invested.
- By December 31, 2023, the return on total capital slightly decreased to 27.63%, suggesting a moderation in capital efficiency compared to the previous year.
- As of the most recent data available on December 31, 2024, Ovintiv Inc's return on total capital stood at 17.07%, indicating a further decrease in capital efficiency, albeit still generating a positive return on the capital employed.
Overall, the data reveals a mixed performance in Ovintiv Inc's return on total capital, with significant improvements observed in certain years while also experiencing fluctuations and some decline in efficiency in others. It is essential for the company to maintain a balanced approach to capital allocation to sustain and enhance its financial performance in the future.
Peer comparison
Dec 31, 2024