Tennant Company (TNC)
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 | 138,600 | 87,200 | 81,400 | 58,500 | 71,700 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 577,000 | 470,800 | 433,800 | 404,800 | 359,900 |
| Return on total capital | 24.02% | 18.52% | 18.76% | 14.45% | 19.92% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $138,600K ÷ ($—K + $577,000K)
= 24.02%
Tennant Co.'s return on total capital has shown fluctuations over the past five years. In 2023, the return on total capital significantly increased to 17.82%, indicating that the company generated $17.82 in profit for every $100 of total capital invested. This improvement in performance suggests that Tennant Co. effectively utilized its capital to generate returns for its investors and stakeholders.
Comparing this to previous years, we observe a varying trend in return on total capital. In 2022, the return on total capital was 10.83%, slightly lower than in 2023. However, in 2021, there was a marginal increase to 11.96%, indicating a positive trend in the company's capital efficiency. In 2020, the return on total capital was 8.93%, which was lower compared to the subsequent years but still above the company's cost of capital. In 2019, the return on total capital was 10.28%, showing a relatively stable performance compared to the surrounding years.
Overall, Tennant Co.'s return on total capital has displayed fluctuations but appears to be on an upward trajectory in recent years, possibly reflecting improved operational efficiency and capital allocation strategies. Investors and stakeholders may view the increasing return on total capital positively, as it indicates the company's ability to generate higher returns on the capital invested in the business.
Peer comparison
Dec 31, 2023