SkyWest Inc (SKYW)

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	104,069	181,162	275,867	108,802	512,258
Long-term debt	US$ in thousands	2,562,180	2,941,770	2,717,420	2,801,540	2,628,990
Total stockholders’ equity	US$ in thousands	2,113,500	2,347,630	2,267,510	2,139,540	2,175,010
Return on total capital		2.23%	3.43%	5.53%	2.20%	10.66%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $104,069K ÷ ($2,562,180K + $2,113,500K)
= 2.23%

Skywest Inc.'s return on total capital (ROTC) has exhibited varying trends over the past five years. In 2023, the company's ROTC was 2.03%, which decreased from the previous year's 3.16%. This decline may indicate a lower effective utilization of the total capital invested in the business to generate profits in 2023.

Looking back to 2021, Skywest Inc. had a negative ROTC of -1.16%, suggesting that the company did not generate sufficient returns to cover the total capital cost in that period. This negative result improved from the prior year's ROTC of -4.43%, indicating some progress in capital efficiency.

In contrast, the ROTC significantly increased in 2019 to 10.34%, pointing towards a more efficient capital allocation and profitability in that year. However, since then, there has been a downward trend in ROTC performance, indicating potential challenges in effectively utilizing the total capital to generate returns in recent years.

Overall, Skywest Inc.'s ROTC trend highlights the importance of continuously monitoring and optimizing capital allocation strategies to enhance profitability and create sustainable value for the company and its stakeholders.