PDF Solutions Inc (PDFS)
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 | -3,702 | -3,476 | -20,762 | -23,250 | -45,548 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 228,946 | 210,012 | 219,585 | 234,506 | 196,157 |
| Return on total capital | -1.62% | -1.66% | -9.46% | -9.91% | -23.22% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-3,702K ÷ ($—K + $228,946K)
= -1.62%
The return on total capital for PDF Solutions Inc. has shown a fluctuating trend over the past five years. In 2023, the return on total capital was -0.07%, indicating a slight improvement compared to the previous year's ratio of -1.00%. Nonetheless, the company has been facing challenges with generating a positive return on its total capital, as seen in the negative ratios for the past five consecutive years.
The declining trend in return on total capital from -3.85% in 2019 to -7.20% in 2021 highlights potential inefficiencies or underperformance in utilizing the company's total capital to generate profits. The negative ratios suggest that the company may be experiencing difficulties in effectively deploying its capital resources to generate adequate returns for its shareholders.
PDF Solutions Inc. needs to focus on improving its operational efficiency, implementing cost-cutting measures, and enhancing revenue generation strategies to reverse the negative trend in its return on total capital. A sustainable improvement in this ratio would indicate that the company is effectively utilizing its capital resources to generate profits and create value for its stakeholders.
Peer comparison
Dec 31, 2023