Telephone and Data Systems Inc (TDS)
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 | 259,000 | -233,000 | 151,000 | 285,000 | 281,000 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 5,091,000 | 5,202,000 | 5,849,000 | 5,927,000 | 4,804,000 |
| Return on total capital | 5.09% | -4.48% | 2.58% | 4.81% | 5.85% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $259,000K ÷ ($—K + $5,091,000K)
= 5.09%
Telephone and Data Systems Inc's return on total capital has exhibited fluctuations over the past five years.
At the end of 2020, the return on total capital was 5.85%, indicating that the company generated a return of 5.85% on the total capital employed in its operations. This was a positive sign, showcasing the company's ability to efficiently utilize its resources to generate returns for its providers of capital.
However, the return on total capital decreased to 4.81% by the end of 2021, signaling a slight decline in the company's efficiency in generating returns on its total capital. The decrease suggests that the company may have faced challenges in maintaining or improving its profitability levels relative to the capital invested.
By the end of 2022, the return on total capital further dropped to 2.58%, indicating a significant decline in the company's ability to generate returns on its total capital compared to the previous years. This decline may raise concerns about the company's operational efficiency and its ability to create value for its capital providers.
The return on total capital turned negative at -4.48% by the end of 2023, which is a concerning sign as it implies that the company is not generating sufficient returns to cover the cost of its capital. A negative return on total capital could indicate that the company's operations are not profitable enough to justify the capital employed, which may warrant a closer examination of the company's financial health and operational performance.
Despite the negative return in 2023, the company managed to improve its return on total capital to 5.09% by the end of 2024. This improvement signals a positive turnaround in the company's efficiency in utilizing its capital to generate returns, although it is essential to monitor whether this improvement can be sustained in the future.
In conclusion, the return on total capital for Telephone and Data Systems Inc has experienced fluctuations over the past five years, reflecting changes in the company's operational performance and efficiency in generating returns on its total capital.
Peer comparison
Dec 31, 2024