Planet Fitness Inc (PLNT)
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 | 324,198 | 283,401 | 238,545 | 129,644 | 67,813 |
| Long-term debt | US$ in thousands | 2,148,030 | 1,962,870 | 1,978,130 | 1,740,270 | 1,751,430 |
| Total stockholders’ equity | US$ in thousands | -215,380 | -115,649 | -199,012 | -645,355 | -705,869 |
| Return on total capital | 16.77% | 15.34% | 13.41% | 11.84% | 6.49% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $324,198K ÷ ($2,148,030K + $-215,380K)
= 16.77%
Planet Fitness Inc's return on total capital has shown a positive trend over the years, increasing from 6.49% in December 31, 2020, to 16.77% in December 31, 2024. This indicates that the company has been able to generate more profits relative to the total capital employed in its operations.
The gradual improvement in return on total capital reflects the company's effective management of its capital investments and operations. A higher return on total capital signifies that Planet Fitness is utilizing its resources efficiently to generate returns for its shareholders. This trend suggests that the company's profitability and operational effectiveness have been improving over the years.
Investors and stakeholders can view the increasing return on total capital positively, as it indicates the company's ability to generate higher profits per unit of capital invested. However, it is important to monitor this ratio over time to ensure that the positive trend continues and remains sustainable for the company's long-term success and value creation.