Westlake Chemical Corporation (WLK)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	875,000	822,000	3,073,000	2,798,000	430,000
Long-term debt	US$ in thousands	4,556,000	4,607,000	4,879,000	4,911,000	3,566,000
Total stockholders’ equity	US$ in thousands	10,527,000	10,241,000	9,931,000	7,955,000	6,043,000
Return on total capital		5.80%	5.54%	20.75%	21.75%	4.47%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $875,000K ÷ ($4,556,000K + $10,527,000K)
= 5.80%

Westlake Chemical Corporation's return on total capital has exhibited fluctuations over the years. The return on total capital was 4.47% at the end of December 31, 2020, indicating a relatively lower efficiency in generating returns relative to the invested capital. However, there was a significant improvement in the subsequent year, with the return on total capital increasing to 21.75% by December 31, 2021, reflecting enhanced profitability and better utilization of capital.

In 2022, the return on total capital remained strong at 20.75%, suggesting that Westlake Chemical continued to effectively generate returns on the total capital employed. However, there was a notable decline in the following year, with the return on total capital dropping to 5.54% by December 31, 2023, which may indicate challenges or changes in the business environment impacting overall capital efficiency.

By the end of December 31, 2024, the return on total capital slightly improved to 5.80%, but it remained relatively lower compared to the peak in 2021. While the return on total capital has shown variability over the years, it is important for Westlake Chemical Corporation to focus on maintaining strong operational performance and efficient capital allocation to sustain profitability and drive long-term value creation for its stakeholders.