Parsons Corp (PSN)

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	363,621	248,784	159,506	105,405	161,989
Long-term debt	US$ in thousands	784,096	745,963	743,605	591,922	539,998
Total stockholders’ equity	US$ in thousands	2,416,390	2,287,210	2,043,570	1,900,770	1,813,770
Return on total capital		11.36%	8.20%	5.72%	4.23%	6.88%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $363,621K ÷ ($784,096K + $2,416,390K)
= 11.36%

The return on total capital for Parsons Corp has shown a fluctuating trend over the past five years. Starting at 6.88% at the end of 2020, the return decreased to 4.23% by the end of 2021. However, there was a slight recovery as the return rose to 5.72% by the end of 2022 before experiencing a more significant increase to 8.20% by the end of 2023. The most notable improvement was seen by the end of 2024, with the return on total capital reaching 11.36%.

This indicates that Parsons Corp effectively utilized its total capital to generate profits and create value for its stakeholders, particularly in the later years. The upward trend in the return on total capital suggests improved efficiency and profitability in the company's operations, potentially due to better capital allocation or operational performance. It is essential for the company to sustain or improve this trend to ensure continued financial health and success.