Teradyne Inc (TER)
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 | 529,378 | 844,104 | 1,178,780 | 925,197 | 547,996 |
| Long-term debt | US$ in thousands | — | 0 | 89,244 | 376,768 | 394,687 |
| Total stockholders’ equity | US$ in thousands | 2,525,900 | 2,451,290 | 2,562,440 | 2,207,020 | 1,480,160 |
| Return on total capital | 20.96% | 34.44% | 44.45% | 35.81% | 29.23% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $529,378K ÷ ($—K + $2,525,900K)
= 20.96%
Teradyne, Inc.'s return on total capital has exhibited variability over the past five years. The return on total capital was relatively high at 45.28% in 2021, indicating efficient utilization of both debt and equity to generate returns. In the subsequent year, the return on total capital decreased to 33.95%, although it remained at a relatively healthy level. However, in 2023, there was a significant decline in the return on total capital to 20.68%, suggesting a potential decrease in the efficiency of capital allocation.
The fluctuation in Teradyne, Inc.'s return on total capital may be attributed to changes in business operations, capital structure, or economic conditions impacting the company's profitability. It is essential for the company to closely monitor its return on total capital and assess factors influencing its fluctuations to ensure sustainable and optimal financial performance.
Peer comparison
Dec 31, 2023