The Cash Return On Invested Capital, or CROIC, measures how effectively a company uses its Invested Capital to generate Cash. It is calculated as Free Cash Flow divided by Invested Capital. This is measured on a historical basis.
CROIC = Free Cash Flow divided by Invested Capital. Invested Capital in turn is calculated as Total Equity + Total Liabilities - Current Liabilities - Excess Cash (using the Greenblatt definition of Excess Cash as cash at hand in excess of 5% of revenues).
The higher the CROIC, the better and a CROIC above 10% is usually regarded as good.
A variant of this is the CROCI, popularised by Deutsche Bank, which is the ratio of EBITDA to the total value of equity.
| Ticker | Name | CROIC | StockRank™ |
|---|---|---|---|
| LON:RENX | Renalytix | 27491.80 | 4 |
| LON:CRTA | Cirata | 3804.53 | 5 |
| LON:ACG | ACG Acquisition | 2443.01 | 6 |
| LON:BGLF | Blackstone Loan Financing | 2053.08 | 98 |
| LON:OBI | Ondine Biomedical | 2043.29 | 1 |