Palo Alto Networks Inc (PANW)
Return on total capital
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | — | 993,100 | 586,800 | -187,000 | -307,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 7,824,400 | 5,169,700 | 1,748,400 | 210,000 | 763,600 |
| Return on total capital | 0.00% | 19.21% | 33.56% | -89.05% | -40.20% |
July 31, 2025 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $—K ÷ ($—K + $7,824,400K)
= 0.00%
The analysis of Palo Alto Networks Inc.'s return on total capital (ROTC) over the specified period reveals significant fluctuations, indicating substantial volatility in the company's utilization of its total capital base. As of July 31, 2021, the ROTC was recorded at -40.20%, suggesting that the company was experiencing a period of significant inefficiency or unprofitability in generating returns relative to its total capital employed. This negative value persisted and worsened considerably by July 31, 2022, reaching a stark -89.05%, which may point to heightened operational challenges, increased expenses, or strategic setbacks impacting overall profitability and capital effectiveness.
However, a notable turnaround is observed by July 31, 2023, with the ROTC rising to 33.56%. This transition from negative to positive territory indicates a period of improved operational efficiency, better capital management, or increased profitability, enabling the company to generate positive returns relative to its total capital. Nonetheless, this positive momentum appears to diminish by July 31, 2024, with ROTC declining to 19.21%, which, although positive, suggests a reduction in the effectiveness of capital utilization compared to the previous year. By July 31, 2025, the ROTC reaches 0.00%, indicating a neutral position where the company is neither generating nor losing returns on its total capital, potentially reflecting a period of stabilization or strategic pause.
Overall, the trajectory shows a turnaround from deep negative returns to positive, followed by a decline towards neutrality, highlighting periods of financial stress recovery and subsequent stabilization phases. These fluctuations suggest that the company's ability to effectively deploy its total capital has experienced severe disruptions in the early years, followed by periods of improving performance, and later stabilization near a break-even point.