Polaris Industries Inc (PII)
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 | 277,800 | 700,900 | 834,100 | 664,800 | 202,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,289,900 | 1,418,400 | 1,099,000 | 1,224,300 | 1,144,500 |
| Return on total capital | 21.54% | 49.41% | 75.90% | 54.30% | 17.65% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $277,800K ÷ ($—K + $1,289,900K)
= 21.54%
Polaris Industries Inc's return on total capital has shown a fluctuating trend over the past five years, with significant variations in performance. Starting at 17.65% on December 31, 2020, the return on total capital increased significantly to 54.30% by December 31, 2021, indicating improved efficiency in generating profits from the total capital employed.
The following year, the return on total capital surged even further to 75.90% by December 31, 2022, reflecting a remarkable growth in profitability and capital utilization. However, the performance dipped slightly in the subsequent year to 49.41% by December 31, 2023, possibly due to changes in the business environment or company strategy.
By December 31, 2024, Polaris Industries Inc's return on total capital stood at 21.54%, showing a decline from the previous year but still above the initial level in 2020. It is essential for the company to assess the factors influencing these fluctuations and implement strategies to maintain a consistent and healthy return on total capital to ensure sustainable growth and value creation for its stakeholders.