Steel Dynamics Inc (STLD)

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	3,278,980	5,091,820	4,301,100	847,142	986,880
Long-term debt	US$ in thousands	2,611,070	3,013,240	3,008,700	3,015,780	2,644,990
Total stockholders’ equity	US$ in thousands	8,866,670	8,130,360	6,304,640	4,345,160	4,075,830
Return on total capital		28.57%	45.69%	46.18%	11.51%	14.68%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $3,278,980K ÷ ($2,611,070K + $8,866,670K)
= 28.57%

Return on total capital is a key ratio that measures a company's ability to generate profits from the total capital employed in its operations. In the case of Steel Dynamics Inc., the return on total capital has fluctuated over the past five years.

The company's return on total capital was 26.40% in 2023, a decrease from the previous year's high of 45.46% in 2022. The significant decline in 2023 may indicate a potential decrease in the company's efficiency in utilizing its total capital to generate profits.

Comparing to the two previous years, in 2021 and 2022, Steel Dynamics Inc. had a relatively stable high return on total capital of around 45%, showcasing strong profitability and efficient capital management. This suggests that the company was effectively utilizing its capital resources to generate returns for its shareholders.

In 2020 and 2019, the return on total capital was lower at 11.63% and 14.49% respectively. This indicates that the company may have faced challenges in generating profits relative to the total capital employed during those years.

Overall, Steel Dynamics Inc.'s return on total capital has shown variability over the past five years, with high points indicating strong profitability and efficient capital utilization, while lower points may suggest potential challenges in maximizing returns on total capital. Further analysis and comparison with industry benchmarks would provide a more comprehensive understanding of the company's performance in this aspect.