Cash Return On Gross Investment - CROGI

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.)