Zimmer Biomet Holdings Inc (ZBH)

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	1,277,700	696,300	860,300	83,100	1,137,500
Long-term debt	US$ in thousands	4,867,900	5,152,200	5,463,700	7,626,500	6,721,400
Total stockholders’ equity	US$ in thousands	12,480,500	12,020,300	12,660,700	12,194,200	12,388,100
Return on total capital		7.36%	4.05%	4.75%	0.42%	5.95%

December 31, 2023 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $1,277,700K ÷ ($4,867,900K + $12,480,500K)
= 7.36%

Zimmer Biomet Holdings Inc's return on total capital has shown a positive trend over the past five years, increasing from 6.56% in 2019 to 7.95% in 2023. This indicates that the company has been generating a higher return on the total capital employed in its operations.

The improvement in return on total capital suggests that Zimmer Biomet Holdings Inc has been effectively utilizing its capital to generate profits. This could be attributed to strategies focused on optimizing operational efficiency, increasing profitability, and managing the capital structure efficiently.

A consistently rising return on total capital is a positive sign for investors and stakeholders as it signifies the company's ability to generate returns from its investments. It also reflects positively on the management's ability to allocate capital effectively and generate value for shareholders. Overall, the increasing trend in return on total capital for Zimmer Biomet Holdings Inc is indicative of improving financial performance and operational efficiency over time.