Shake Shack Inc (SHAK)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 17,971 | -20,891 | -14,302 | -41,286 | 23,647 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 443,417 | 412,204 | 409,537 | 407,321 | 298,817 |
| Return on total capital | 4.05% | -5.07% | -3.49% | -10.14% | 7.91% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $17,971K ÷ ($—K + $443,417K)
= 4.05%
Return on Total Capital is a key financial ratio that indicates the efficiency and profitability of a company in generating profits from its total capital employed, including both equity and debt.
Looking at the data provided for Shake Shack Inc over the past five years, there has been significant fluctuation in the Return on Total Capital. In 2023, the company's Return on Total Capital stood at 4.05%, indicating a positive return on the total capital invested in the business.
However, in the preceding years, Shake Shack Inc experienced negative Returns on Total Capital, with the ratio being -5.07% in 2022, -3.49% in 2021, and -10.14% in 2020. These negative figures suggest that the company was not able to generate sufficient profits from the capital employed during those years, which could be a cause for concern.
Additionally, in 2019, Shake Shack Inc posted a notably higher Return on Total Capital of 7.91%, indicating a strong profitability relative to the capital invested.
Overall, the fluctuating trend in Shake Shack Inc's Return on Total Capital highlights the company's varying levels of efficiency in utilizing its total capital to generate profits over the years, with the most recent year showing a positive performance in this regard.
Peer comparison
Dec 31, 2023