Smart Global Holdings Inc (SGH)

Return on total capital

		Aug 25, 2023	Aug 26, 2022	Aug 27, 2021	Aug 28, 2020	Aug 30, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	8,745	67,176	-15,706	41,330	89,081
Long-term debt	US$ in thousands	754,820	—	340,484	195,573	182,450
Total stockholders’ equity	US$ in thousands	222,475	371,611	310,251	282,104	273,460
Return on total capital		0.89%	18.08%	-2.41%	8.65%	19.54%

August 25, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $8,745K ÷ ($754,820K + $222,475K)
= 0.89%

To analyze SMART Global Holdings Inc's return on total capital over the past five years, we can observe a fluctuating trend. The return on total capital decreased from 18.00% in August 2019 to 9.38% in August 2020, indicating a decline in the company's efficiency in generating profits from its total capital. However, there was a notable improvement in August 2021, with the return on total capital increasing to 13.26%.

Subsequently, in August 2022, there was a significant rise in the return on total capital to 15.98%, reflecting improved capital utilization and profitability. However, in the most recent period, August 2023, the return on total capital decreased to 5.61%, suggesting a decrease in the company's overall efficiency in generating returns from its total capital.

Overall, the trend in SMART Global Holdings Inc's return on total capital indicates some volatility in the company's ability to efficiently utilize its total capital to generate profits. It is essential to monitor future financial performance to assess the sustainability of this trend.