Shake Shack Inc (SHAK)
Return on total capital
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 16,289 | 18,697 | -22,767 | -15,758 | -44,662 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 470,018 | 443,417 | 395,116 | 435,600 | 407,321 |
| Return on total capital | 3.47% | 4.22% | -5.76% | -3.62% | -10.96% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $16,289K ÷ ($—K + $470,018K)
= 3.47%
The return on total capital for Shake Shack Inc has exhibited fluctuations over the period from December 31, 2020, to December 31, 2024. The ratio started at a concerning level of -10.96% in 2020, indicating that the company was not efficiently utilizing its total capital to generate profits. However, there was a slight improvement in 2021, with the ratio improving to -3.62%.
In 2022, the return on total capital declined to -5.76%, suggesting continued inefficiencies in capital allocation. The trend reversed in 2023, with the company achieving a positive return of 4.22%, indicating that Shake Shack Inc had started to generate returns above the cost of its total capital.
By the end of 2024, the return on total capital further improved to 3.47%, reflecting a positive trend in utilizing capital effectively to generate profits. Overall, the company's return on total capital showed volatility but ended on a positive note, indicating a potential enhancement in the efficiency of capital utilization during the period under consideration.
Peer comparison
Dec 31, 2024