Sonic Automotive Inc (SAH)

Return on total capital

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	423,600	178,000	189,500	266,000	314,000	617,800	594,300	604,900	538,400	484,498	455,531	343,675	33,900	20,318	-10,919	-1,490	307,700	274,175	257,116	244,790
Long-term debt	US$ in thousands	1,616,500	1,623,100	1,629,500	1,650,800	1,672,200	1,442,400	1,462,000	1,493,200	1,510,700	637,774	634,712	637,377	651,800	669,684	677,488	830,839	636,978	846,222	851,283	880,939
Total stockholders’ equity	US$ in thousands	891,900	857,500	876,700	854,800	895,200	1,106,900	1,170,000	1,135,000	1,076,400	1,005,800	946,400	826,400	814,800	774,102	744,702	721,987	944,800	902,425	875,725	852,286
Return on total capital		16.89%	7.18%	7.56%	10.62%	12.23%	24.23%	22.58%	23.02%	20.81%	29.48%	28.81%	23.48%	2.31%	1.41%	-0.77%	-0.10%	19.45%	15.68%	14.89%	14.12%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $423,600K ÷ ($1,616,500K + $891,900K)
= 16.89%

Sonic Automotive, Inc.'s return on total capital has shown a downward trend over the quarters from Q4 2022 to Q4 2023, decreasing from 15.42% to 11.16%. This indicates a decline in the company's ability to generate profits from the total capital employed in its operations.

Although the return on total capital has fluctuated over the quarters, it generally remained above 10%, suggesting that Sonic Automotive has been able to maintain a satisfactory level of returns relative to its total capital base. However, the declining trend should be carefully monitored to ensure that the company's capital utilization and operational efficiency are optimized to enhance overall profitability in the future.