Roivant Sciences Ltd (ROIV)

Return on total capital

		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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	4,405,928	4,324,659	-1,184,718	-1,174,485	-1,218,531	-1,253,115	-1,158,035	-1,083,473	-837,852
Long-term debt	US$ in thousands	204,371	194,560	188,911	187,140	180,700	183,510	188,680	200,700	210,025	204,042	199,869	186,350
Total stockholders’ equity	US$ in thousands	5,968,580	6,089,760	948,534	910,730	1,157,770	955,520	1,160,600	1,384,110	1,656,940	1,865,720	2,038,020	1,723,120
Return on total capital		71.37%	68.82%	-104.16%	-106.98%	-91.04%	-110.02%	-85.83%	-68.37%	-44.88%

March 31, 2024 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $4,405,928K ÷ ($204,371K + $5,968,580K)
= 71.37%

Roivant Sciences Ltd has experienced fluctuating performance in terms of return on total capital over the past several quarters. The return on total capital was positive in the most recent quarter ending March 31, 2024, at 71.37%, indicating that the company generated a good return on the total capital invested. However, in the preceding quarter, the return on total capital was slightly lower at 68.82%.

In contrast, the company reported negative returns in the quarters prior to December 31, 2023. Specifically, the return on total capital was -104.16% in September 30, 2023, and continued to deteriorate to -106.98% in June 30, 2023, and -91.04% in March 31, 2023. These negative returns suggest that the company's capital investments were underperforming or not generating sufficient returns to cover the capital employed.

The trend of negative returns on total capital seems to have started in the quarter ending December 31, 2022, where the return on total capital was at -110.02%. This negative trend continued in subsequent quarters but showed signs of improvement towards the end of the analyzed period, with the return on total capital improving to -85.83% in September 30, 2022, and further to -68.37% in June 30, 2022.

Overall, the return on total capital for Roivant Sciences Ltd has been volatile and inconsistent over the past few quarters, with periods of positive performance interspersed with significant negative returns. It will be important for the company to focus on optimizing its capital allocation and investment strategies to ensure sustained positive returns in the future.