Capital efficiency (Cap. efficiency)
How many units of revenue the business generates per unit of capital employed.
It is one half of the return on capital: the other half is the margin on that revenue.
How it is computed here
Revenue / (shareholders equity + total debt - cash)
Measured over the latest complete fiscal year, as filed. Filed under quality. Higher is the stronger reading, other things equal.
No published threshold exists for this figure, so this page prints none. Read it against the company's own history and its peers instead.
When it misleads
- High turnover at a thin margin and low turnover at a fat margin can be equally good businesses. Never read alone.
- There is no cross-industry threshold worth printing. The peer percentile against companies in the same industry is the only defensible reading.
Questions
How is capital efficiency calculated?
Revenue / (shareholders equity + total debt - cash). Measured over the latest complete fiscal year, as filed.
What does capital efficiency tell a value investor?
It is one half of the return on capital: the other half is the margin on that revenue.
When does capital efficiency mislead?
High turnover at a thin margin and low turnover at a fat margin can be equally good businesses. Never read alone. There is no cross-industry threshold worth printing. The peer percentile against companies in the same industry is the only defensible reading.