Watsco Inc (WSO)
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 | 794,810 | 831,578 | 628,528 | 401,034 | 366,884 |
| Long-term debt | US$ in thousands | 15,400 | 0 | 89,000 | 0 | 157,709 |
| Total stockholders’ equity | US$ in thousands | 2,229,840 | 1,889,240 | 1,664,950 | 1,486,680 | 1,435,430 |
| Return on total capital | 35.40% | 44.02% | 35.84% | 26.98% | 23.03% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $794,810K ÷ ($15,400K + $2,229,840K)
= 35.40%
Watsco Inc.'s return on total capital has shown a positive trend over the past five years. The company's return on total capital has increased from 22.07% in 2019 to 33.71% in 2023. This indicates that the company has been effectively utilizing its total capital resources to generate returns for its investors and shareholders.
The highest return on total capital was recorded in 2022 at 40.61%, demonstrating the company's strong performance in that particular year. Although there was a slight dip in 2020 to 25.65%, the company managed to bounce back and achieve a higher return in subsequent years.
Overall, the consistent improvement in Watsco Inc.'s return on total capital reflects its efficient management of capital resources and ability to deliver value to its stakeholders.