Solventum Corp. (SOLV)
Return on total capital
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,535,500 | 1,564,000 | 1,596,000 | 1,626,000 | 1,658,000 | |||
| Long-term debt | US$ in thousands | — | — | — | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 3,851,000 | 3,409,000 | 3,250,000 | 3,964,000 | 11,742,000 | 11,742,000 | — | — |
| Return on total capital | 39.87% | 45.88% | 49.11% | 41.02% | 14.12% |
March 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $1,535,500K ÷ ($—K + $3,851,000K)
= 39.87%
Solventum Corp.'s return on total capital has displayed fluctuating trends over the past eight quarters. The return on total capital ratio measures the company's efficiency in generating profits from its total capital employed, including both debt and equity.
From the data provided, it is evident that Solventum Corp. experienced a significant increase in return on total capital from the first quarter of 2023 to the third quarter of 2023, reaching a peak of 49.11%. This indicates that the company was effectively utilizing its total capital to generate profits during this period.
However, in the subsequent quarters, Solventum Corp.'s return on total capital showed a declining trend, dropping to 39.87% in the first quarter of 2024. While still a relatively high return, this decrease suggests potential challenges in maintaining or improving the efficiency of capital utilization.
It is essential for Solventum Corp. to closely monitor and analyze the factors impacting its return on total capital to ensure sustainable profitability and efficient use of resources in the coming quarters. A thorough examination of operational strategies, investment decisions, and overall financial management practices may help the company enhance its return on total capital and drive long-term value for its stakeholders.
Peer comparison
Mar 31, 2024