Advanced Drainage Systems Inc (WMS)
Return on total capital
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 732,131 | 719,310 | 411,918 | 344,525 | -95,349 |
| Long-term debt | US$ in thousands | 1,259,520 | 1,269,390 | 908,705 | 782,220 | 1,089,370 |
| Total stockholders’ equity | US$ in thousands | 1,153,310 | 824,147 | 893,039 | 819,784 | 525,723 |
| Return on total capital | 30.34% | 34.36% | 22.86% | 21.51% | -5.90% |
March 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $732,131K ÷ ($1,259,520K + $1,153,310K)
= 30.34%
Advanced Drainage Systems Inc has shown a fluctuating trend in its return on total capital over the past five years. In the most recent fiscal year ending March 31, 2024, the company achieved a return on total capital of 30.34%, indicating a solid performance in generating returns relative to the capital invested. This represents a slight decrease from the previous year's figure of 34.36%.
Comparing the latest result with earlier years, we observe that there has been a general upward trajectory in return on total capital since the negative return of -5.90% in the fiscal year ending March 31, 2020. This improvement suggests that Advanced Drainage Systems Inc has been more effective in utilizing its capital to generate profits.
The company's return on total capital exceeded 20% in each of the past three fiscal years, highlighting its ability to generate strong returns relative to the total capital employed. Investors may view this positively as it indicates the company's operational efficiency and profitability. However, the slight decline in the most recent year warrants monitoring to assess whether this trend continues in future periods.