UGI Corporation (UGI)
Return on total capital
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -1,458,000 | 1,715,000 | 2,299,000 | 989,000 | 607,000 |
| Long-term debt | US$ in thousands | 6,543,000 | 6,483,000 | 6,339,000 | 5,981,000 | 5,780,000 |
| Total stockholders’ equity | US$ in thousands | 4,386,000 | 6,066,000 | 5,522,000 | 4,128,000 | 3,817,000 |
| Return on total capital | -13.34% | 13.67% | 19.38% | 9.78% | 6.32% |
September 30, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-1,458,000K ÷ ($6,543,000K + $4,386,000K)
= -13.34%
Return on total capital is a crucial ratio that indicates the profitability of a company in relation to its total capital employed, including both debt and equity. A higher return on total capital signifies efficient utilization of capital, while a lower ratio may indicate inefficiency or higher financial risk.
Looking at UGI Corp.'s return on total capital over the past five years, there is a significant fluctuation in the ratio. In 2023, the return on total capital stands at -5.99%, which represents a negative return, indicating that the company's capital employed generated a loss during the year. This negative return could be a cause for concern and warrants further investigation into the company's operations and financial management.
In 2022, the return on total capital was 12.04%, reflecting a decent return on the capital employed. The company was able to generate a positive return, which indicates an efficient use of capital to generate profits.
In 2021, the return on total capital increased to 18.27%, signaling a significant improvement in the company's profitability and capital efficiency. This increase suggests that the company was able to generate higher profits relative to its total capital employed, which is a positive sign for investors and stakeholders.
In 2020, the return on total capital was 9.92%, indicating a moderate increase from the previous year. The company continued to show improvement in efficiently utilizing its capital to generate returns.
In 2019, the return on total capital stood at 5.71%, showing a steady but relatively lower return compared to the subsequent years.
In summary, UGI Corp.'s return on total capital has exhibited considerable variability over the past five years, with 2023 showing a negative return, while the other years demonstrated positive returns. This fluctuation may indicate changes in the company's capital management, profitability, or risk profile, and should be carefully evaluated in the context of the company's overall financial performance and business strategy.
Peer comparison
Sep 30, 2023