Unifirst Corporation (UNF)
Return on total capital
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 133,603 | 134,351 | 195,825 | 172,729 | 232,008 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 2,003,960 | 1,915,870 | 1,872,950 | 1,741,130 | 1,641,230 |
| Return on total capital | 6.67% | 7.01% | 10.46% | 9.92% | 14.14% |
August 26, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $133,603K ÷ ($—K + $2,003,960K)
= 6.67%
The return on total capital (ROTC) is a crucial measure of a company's ability to generate returns from its overall capital structure. It reflects the efficiency and effectiveness of the company's use of both equity and debt financing.
The trend in Unifirst Corp.'s ROTC over the past five years reveals a fluctuating pattern. In 2019, the ROTC was at its peak at 14.14%, signifying a robust ability to generate returns relative to its total capital. However, this figure decreased to 9.92% in 2020, indicating a dip in the company's performance in utilizing its capital. The subsequent year, the ROTC further declined to 10.46%, before dropping to 7.01% in 2022, signaling a concerning trend of diminishing returns.
The most recent data in 2023 indicates a ROTC of 6.67%, which continues the downward trajectory. This decline may raise concerns about the company's capital efficiency and overall operational performance.
The decreasing ROTC figures over the past five years may suggest challenges in effectively deploying the company's capital and generating satisfactory returns. Further analysis of the financial statements and operational aspects of Unifirst Corp. would be necessary to pinpoint the drivers behind this deteriorating trend and to develop strategies to reverse this pattern.
Peer comparison
Aug 26, 2023