EV/GCI (enterprise value/gross cash invested) is an advanced valuation multiple used to compare a company's book value of its assets to their current market value. The ratio is similar to P/B ratio, but EV/GCI is calculated on an EV-basis, taking into account all the company's security-holders.[1]
Formula
- GCI (Gross cash invested) = (Gross tangible and intangible assets before depreciation or write-offs) + (investments in associates) + (working capital)[2]
When EV/GCI is higher than 1, then the market is willing to pay a valuation premium. A discount takes place in the opposite case.
References
- ^ "Introducing GS Sustain". Retrieved 29 October 2015.
- ^ Workshop V: Relative Valuation