Walgreens Boots Alliance Inc (WBA)
Return on total capital
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -4,358,000 | 4,707,000 | 4,114,000 | 1,408,000 | 5,209,000 |
| Long-term debt | US$ in thousands | 8,145,000 | 10,615,000 | 7,675,000 | 12,203,000 | 11,098,000 |
| Total stockholders’ equity | US$ in thousands | 20,020,000 | 25,275,000 | 23,419,000 | 20,637,000 | 23,512,000 |
| Return on total capital | -15.47% | 13.12% | 13.23% | 4.29% | 15.05% |
August 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-4,358,000K ÷ ($8,145,000K + $20,020,000K)
= -15.47%
The return on total capital (ROTC) of Walgreens Boots Alliance Inc has fluctuated significantly over the past five years, as indicated by the data provided.
In 2019, the company achieved a relatively high ROTC of 12.44%, reflecting strong financial performance and efficient utilization of its total capital. However, this figure decreased to 3.72% in 2020, suggesting a decline in the company's ability to generate returns relative to its total capital employed.
The subsequent year, 2021, saw a moderate improvement in ROTC to 9.16%, indicating a partial recovery in the company's capital efficiency. This upward trend continued into 2022, with an ROTC of 3.89%, although this figure remained below the 2019 level.
However, the most recent data for August 31, 2023, reveals a sharp decline in the ROTC to -23.55%. This negative percentage signals that the company's returns were insufficient to cover the total capital employed, which may raise concerns regarding the effectiveness of the company's capital allocation and utilization.
Overall, the fluctuating trend in ROTC over the past five years suggests that Walgreens Boots Alliance Inc's ability to generate returns from its total capital has been volatile and may require further scrutiny to identify underlying factors contributing to these fluctuations.
Peer comparison
Aug 31, 2023