Western Digital Corporation (WDC)
Return on total capital
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -317,000 | -1,248,000 | 2,427,000 | 1,253,000 | 367,000 |
| Long-term debt | US$ in thousands | 5,684,000 | 5,857,000 | 7,022,000 | 8,474,000 | 9,289,000 |
| Total stockholders’ equity | US$ in thousands | 10,818,000 | 10,964,000 | 12,221,000 | 10,721,000 | 9,551,000 |
| Return on total capital | -1.92% | -7.42% | 12.61% | 6.53% | 1.95% |
June 30, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-317,000K ÷ ($5,684,000K + $10,818,000K)
= -1.92%
Return on total capital is a key financial ratio that measures a company's efficiency in generating profits from the total capital employed in its operations.
Western Digital Corporation's return on total capital has been fluctuating over the past five years. In 2024, the company's return on total capital was -1.92%, indicating a negative return, which implies that the company's capital employed did not generate sufficient returns to cover the costs of that capital. This may raise concerns about the company's ability to efficiently utilize its capital and generate profits.
In 2023, the return on total capital was -7.42%, which was even lower compared to 2024, indicating a further decline in the company's financial performance in terms of capital efficiency. This suggests potential inefficiencies in managing the capital invested in the business.
However, in 2022, Western Digital Corporation experienced a significant improvement in its return on total capital, reaching 12.61%. This indicates that the company generated a substantial return relative to the total capital employed, reflecting better efficiency in utilizing its financial resources to generate profits.
In 2021 and 2020, the return on total capital was 6.53% and 1.95%, respectively, showing modest but positive returns compared to the negative returns in 2023 and 2024. These results suggest that the company was able to generate reasonable profits relative to the capital invested.
Overall, Western Digital Corporation's return on total capital has been volatile over the past five years, with both positive and negative fluctuations. Investors and stakeholders should closely monitor this ratio to assess the company's ability to effectively utilize its capital and generate sustainable profits in the future.
Peer comparison
Jun 30, 2024