Viper Energy Ut (VNOM)
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 | 294,947 | 680,482 | 361,572 | 52,914 | 193,540 |
| Long-term debt | US$ in thousands | — | — | — | — | — |
| Total stockholders’ equity | US$ in thousands | 1,014,290 | 690,659 | 2,232,830 | 1,860,830 | 2,185,420 |
| Return on total capital | 29.08% | 98.53% | 16.19% | 2.84% | 8.86% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $294,947K ÷ ($—K + $1,014,290K)
= 29.08%
The return on total capital of Viper Energy Ut has fluctuated over the past five years, ranging from as low as 2.84% in 2020 to as high as 98.53% in 2022. This ratio measures the ability of the company to generate profits from both its debt and equity capital. A higher ratio implies the company is effectively utilizing its capital to generate returns for its investors.
The sharp increase in 2022 compared to the preceding and following years indicates a significant improvement in capital efficiency during that period. However, the substantial decrease in 2020 suggests a period of lower profitability. It is essential for Viper Energy Ut to consistently monitor and manage its capital allocation to ensure sustainable and favorable returns on its total capital in the future.
Peer comparison
Dec 31, 2023