Cash Return On Capital Invested - CROCI
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Definition of 'Cash Return On Capital Invested - CROCI'
A method of valuation that compares a company's cash return to its equity. Developed by the Deutsche Bank's global valuation group, CROCI provides analysts with a cash flow based metric for evaluating the earnings of a company. Also known as "cash return on cash invested".
CROCI is found by the following formula:
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Investopedia explains 'Cash Return On Capital Invested - CROCI'
Cash return on capital invested is a variation of the economic profit model. In essence, CROCI measures the cash profits of a company as a proportion of the funding required to generate them. It acknowledges both common and preferred share equity (as well as long-term funded debt) as sources of capital.
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