Westlake Chemical Corporation (WLK)
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 | 822,000 | 3,073,000 | 2,798,000 | 430,000 | 653,000 |
| Long-term debt | US$ in thousands | 4,607,000 | 4,879,000 | 4,911,000 | 3,566,000 | 3,445,000 |
| Total stockholders’ equity | US$ in thousands | 10,241,000 | 9,931,000 | 7,955,000 | 6,043,000 | 5,860,000 |
| Return on total capital | 5.54% | 20.75% | 21.75% | 4.47% | 7.02% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $822,000K ÷ ($4,607,000K + $10,241,000K)
= 5.54%
Westlake Corporation's return on total capital has exhibited some fluctuations over the past five years. In 2023, the return on total capital was 8.13%, showing a decrease from the previous year's figure of 20.82% in 2022. This substantial decline could be a cause for concern as it may indicate a decrease in the company's efficiency in generating returns from its total capital.
However, when compared to 2021 and earlier years, the return on total capital in 2023 appears to be relatively lower. In 2021, Westlake Corporation achieved a return on total capital of 21.48%, which was the highest in the five-year period. This suggests that there may have been changes in the company's operations or capital structure that impacted its ability to generate returns.
The returns in 2020 and 2019 were 4.84% and 7.45% respectively, indicating variability in the company's performance in utilizing its total capital effectively over the years. The fluctuation in returns over the years may require further analysis to understand the factors contributing to the changes in the company's return on total capital.
In conclusion, Westlake Corporation's return on total capital has fluctuated over the past five years, with a significant decline in 2023 compared to the previous year. Further investigation into the company's operations and financial management may be necessary to determine the reasons behind these fluctuations and to improve its return on total capital in the future.
Peer comparison
Dec 31, 2023