Trane Technologies plc (TT)
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 | 3,433,900 | 2,756,800 | 2,355,900 | 1,990,600 | 1,400,400 |
| Long-term debt | US$ in thousands | 4,318,100 | 3,977,900 | 3,788,300 | 4,491,700 | 4,496,500 |
| Total stockholders’ equity | US$ in thousands | 7,457,400 | 6,995,200 | 6,088,600 | 6,255,900 | 6,407,700 |
| Return on total capital | 29.16% | 25.12% | 23.85% | 18.52% | 12.84% |
December 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $3,433,900K ÷ ($4,318,100K + $7,457,400K)
= 29.16%
Based on the provided data, Trane Technologies plc's return on total capital has shown a positive trend over the years. The return on total capital increased from 12.84% as of December 31, 2020, to 18.52% as of December 31, 2021, indicating an improvement in the company's efficiency in generating returns from its total capital employed.
Further, the return on total capital continued to rise to 23.85% as of December 31, 2022, 25.12% as of December 31, 2023, and eventually reached 29.16% as of December 31, 2024. This progressive increase suggests that Trane Technologies plc has been able to effectively deploy its total capital to generate higher returns for its stakeholders, reflecting sound operational efficiency and effective capital utilization.
Overall, the consistent growth in Trane Technologies plc's return on total capital over the years signifies the company's ability to create value for its investors and optimize its capital structure towards maximizing profitability and sustainable growth.