Parsons Corp (PSN)

Return on total capital

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	170,958	153,737	117,511	78,679	248,784	229,098	207,507	170,296	159,506	149,387	132,276	119,174	105,405	105,391	134,966	158,865	161,989	138,629	122,747	76,537
Long-term debt	US$ in thousands	784,096	1,132,980	1,247,310	1,246,440	745,963	820,366	744,777	744,140	743,605	694,718	792,982	592,450	591,922	591,399	590,876	590,346	539,998	537,119	—	—
Total stockholders’ equity	US$ in thousands	2,416,390	2,312,450	2,218,510	2,149,670	2,287,210	2,172,740	2,119,430	2,063,880	2,043,570	1,953,070	1,928,180	1,918,190	1,900,770	1,824,080	1,813,460	1,796,800	1,813,770	1,727,500	1,667,550	1,635,260
Return on total capital		5.34%	4.46%	3.39%	2.32%	8.20%	7.65%	7.24%	6.06%	5.72%	5.64%	4.86%	4.75%	4.23%	4.36%	5.61%	6.66%	6.88%	6.12%	7.36%	4.68%

December 31, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $170,958K ÷ ($784,096K + $2,416,390K)
= 5.34%

Parsons Corp's return on total capital has shown fluctuations over the past few years, ranging from a low of 2.32% as of March 31, 2024, to a high of 8.20% as of December 31, 2023. The trend appears to have been relatively stable from March 31, 2020, to March 31, 2023, with some variability in between.

The return on total capital indicates how effectively the company is generating profits from its invested capital, including both debt and equity. A higher return on total capital is generally preferable as it signifies efficient utilization of resources to generate income for the business and its stakeholders.

It is worth noting that the return on total capital experienced a notable decline in the latest reported period, dropping from 8.20% as of December 31, 2023, to 5.34% as of December 31, 2024. This decline may be a cause for further investigation into the company's operational performance and capital allocation strategies to ensure sustained profitability and growth in the future.