West Pharmaceutical Services Inc (WST)
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 | 724,700 | 708,500 | 777,200 | 426,900 | 309,200 |
| Long-term debt | US$ in thousands | 72,800 | 206,700 | 208,800 | 252,900 | 255,000 |
| Total stockholders’ equity | US$ in thousands | 2,881,000 | 2,684,900 | 2,335,400 | 1,854,500 | 1,573,200 |
| Return on total capital | 24.53% | 24.50% | 30.55% | 20.26% | 16.91% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $724,700K ÷ ($72,800K + $2,881,000K)
= 24.53%
The return on total capital for West Pharmaceutical Services, Inc. has shown a fluctuating trend over the past five years. In 2023, the return on total capital was 23.48%, which was lower than the previous year's figure of 27.01%. However, the return on total capital in 2023 was greater than the returns recorded in 2021, 2020, and 2019, indicating improved capital efficiency.
Overall, the company has achieved a positive return on total capital each year, reflecting its ability to generate earnings relative to the total capital invested in the business. The decreasing trend from 2021 to 2023 may suggest a potential decline in capital efficiency, although it is important to consider the company's industry dynamics and specific business circumstances when evaluating this metric. Further analysis of the company's financial performance and capital allocation strategies would provide deeper insights into the trends observed in the return on total capital figures.
Peer comparison
Dec 31, 2023