Parsons Corp (PSN)

Return on total capital

		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	Dec 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	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	74,377
Long-term debt	US$ in thousands	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	—	—	249,353
Total stockholders’ equity	US$ in thousands	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	1,629,890
Return on total capital		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%	3.96%

September 30, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $153,737K ÷ ($1,132,980K + $2,312,450K)
= 4.46%

The return on total capital for Parsons Corp has shown fluctuations over the past few quarters. As of September 30, 2024, the return on total capital stood at 4.46%, showing a slight improvement from the previous quarter. However, when comparing it to the performance in December 2023, the return on total capital has decreased significantly from 8.20%.

Looking at the trend over the past few quarters, there was a gradual increase in return on total capital from March 2021 to March 2023, reaching a peak of 6.88% in March 2021. However, there has been a mild decline in this ratio since then.

It is essential for stakeholders to closely monitor the return on total capital as it indicates the efficiency of the company in generating profits from its total capital employed. The management of Parsons Corp may need to focus on optimizing the utilization of capital to improve this ratio in the future quarters.