There is no shortage of ways to determine the financial health and operational performance of a company. But one of the top ways that people like to determine this is by using ratios, ratios, and more ratios.
One of the best ratios is called Cash Return on Gross Investment (CROGI), and not just because it has an awesome acronym that is almost "corgi." It provides a measurement of just how much cash flow is generated by every dollar invested into the company. Which is why it’s also sometimes called “Cash Flow Return on Investment.”
If it reminds you at all of Internal Rate of Return (IRR), then you know finance well. This measurement is based on the metrics of IRR.
To determine CROGI, divide the company’s gross operating cash flow before interest and taxes by the company’s capital employed (operating assets less its interest-free capital.)
Related or Semi-related Video
Finance: What is an Annualized Return?36 Views
Finance, a la shmoop. What is an annualized return? Alright people, well
when you invest a dollar you hope or even expect to get more than a dollar [ATM machine]
back, at some point. And let's say you invested that dollar in Terminators
Closet -a leading dealer in cybernetic body enhancements. And it went from $1 a
share to a dollar ten six months later. Alright, nice return.
You made 10% in just six months but in most investing discussions ,investment [spreadsheet shown]
returns are discussed in the form of annual returns, not monthly or daily or
biannual numbers, so you need to convert your six-month return into an annualized [angelic glow]
one, and you can do the process here of computing that number that is if you made
10% in six months well then in a year presumably you could notion that you'd
have made 20%. It's not that you would have guaranteedly made 20% it's just [spreadsheet shown]
the math saying that well if you had compounded at that rate then you'd have
made 20%, so what if she made 10% in a month? Well the stock went from a buck a
share Jan 1 to a buck ten a share by Feb 1 .Well if you impute so that you can [calendar shown]
compute that month's gain of 10% would carry a compound rate of a hundred
twenty percent. Right ? You're multiplying 12 months times 10 there, that'd be
annualizing it meaning, that at that rate you are more than doubling your money on [spreadsheet shown]
an annualized return basis. And that's more than enough dough to keep
terminators closet popping out those Wi-Fi enabled contact lenses faster than [woman watches TV]
people can wear them.
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