Watsco Inc (WSO)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	794,810	824,241	803,877	825,269	831,578	817,465	788,011	717,697	628,528	575,223	525,205	437,671	401,034	383,306	351,844	339,240	340,362	346,831	343,809	346,203
Long-term debt	US$ in thousands	15,400	105,600	342,900	197,600	0	8,800	203,600	262,500	89,000	1,724	114,167	48,900	0	668	33,357	156,143	157,709	171,163	221,312	139,249
Total stockholders’ equity	US$ in thousands	2,229,840	2,224,010	2,037,650	1,928,870	1,889,240	1,908,780	1,834,440	1,725,210	1,664,950	1,644,580	1,575,700	1,491,410	1,486,680	1,489,610	1,437,040	1,404,340	1,435,430	1,443,110	1,355,600	1,335,210
Return on total capital		35.40%	35.38%	33.77%	38.81%	44.02%	42.63%	38.67%	36.11%	35.84%	34.94%	31.08%	28.41%	26.98%	25.72%	23.93%	21.74%	21.36%	21.49%	21.80%	23.48%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $794,810K ÷ ($15,400K + $2,229,840K)
= 35.40%

Analyzing the return on total capital for Watsco Inc. over the past eight quarters, we observe a consistent trend of strong performance in generating returns relative to the total capital employed by the company. The return on total capital has ranged from a high of 40.61% in Q4 2022 to a low of 32.33% in Q2 2023.

Overall, Watsco Inc. has exhibited stable and robust returns on total capital, with the company consistently achieving ratios above 30% over the period under review. This indicates that Watsco Inc. has been effectively utilizing its capital to generate profits and create value for its stakeholders.

The variability in the return on total capital figures suggests that the company's performance may be influenced by factors such as market conditions, operational efficiency, and strategic decisions. However, the generally high levels of return on total capital demonstrate Watsco Inc.'s ability to generate significant returns on the capital invested in its operations.