Trane Technologies plc (TT)
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 | 2,756,800 | 2,355,900 | 1,990,600 | 1,400,400 | 1,892,300 |
| Long-term debt | US$ in thousands | 3,977,900 | 3,788,300 | 4,491,700 | 4,496,500 | 4,922,900 |
| Total stockholders’ equity | US$ in thousands | 6,995,200 | 6,088,600 | 6,255,900 | 6,407,700 | 7,267,600 |
| Return on total capital | 25.12% | 23.85% | 18.52% | 12.84% | 15.52% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $2,756,800K ÷ ($3,977,900K + $6,995,200K)
= 25.12%
Trane Technologies plc's return on total capital has shown a consistent upward trend over the past five years. The company's return on total capital increased from 15.71% in 2019 to 24.58% in 2023, indicating improved efficiency in generating profits from its total capital employed. This upward trajectory suggests that Trane Technologies is effectively utilizing its capital resources to generate returns for its shareholders.
The year-over-year increases in return on total capital indicate that the company has been successful in increasing its profitability relative to the total capital invested in its operations. This could be attributed to various factors such as effective cost management, operational efficiency improvements, strategic investments, or revenue growth.
Overall, the rising trend in Trane Technologies plc's return on total capital reflects positively on the company's financial performance and management's ability to generate value from its capital base. Investors and stakeholders may view this consistent improvement as a sign of the company's strength and sustainability in creating value over time.