Southern Company (SO)
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 | 5,826,000 | 5,370,000 | 3,698,000 | 4,885,000 | 7,736,000 |
| Long-term debt | US$ in thousands | 59,400,000 | 54,600,000 | — | — | — |
| Total stockholders’ equity | US$ in thousands | 31,444,000 | 30,408,000 | 27,874,000 | 27,972,000 | 27,505,000 |
| Return on total capital | 6.41% | 6.32% | 13.27% | 17.46% | 28.13% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $5,826,000K ÷ ($59,400,000K + $31,444,000K)
= 6.41%
The return on total capital for Southern Company has shown a slight decline over the past five years, with the ratio decreasing from 7.40% in 2019 to 6.32% in 2023. This indicates that the company is generating a lower return on its total capital employed in its operations.
While the downward trend may raise concerns about the company's efficiency in utilizing its capital to generate profits, it is important to note that the return on total capital remains relatively stable within the range of 6.32% to 7.40% over the period.
Further analysis of the company's financial performance and other key ratios would be beneficial to understand the factors contributing to the fluctuations in the return on total capital and evaluate the overall financial health and profitability of Southern Company.
Peer comparison
Dec 31, 2023