EV/GCI

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

External links

COMPANY UPDATE Ericsson (ERICb.ST) Archived 2012-03-13 at the Wayback Machine
COMPANY UPDATE Benetton Group (BNG.MI)

[1] "Introducing GS Sustain". Retrieved 29 October 2015.

[2] Workshop V: Relative Valuation

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