What is EV/GCI?
This is a metric used to value a business. It stands for enterprise value/gross cash invested. It’s an advanced valuation technique that compares the value of assets on a company's balance sheet with their current market value.
Where have you heard about EV/GCI?
This measurement isn’t as widely used as some of the other valuation techniques such as EV/EBITDA, but it is another string to add to your bow if you want to evaluate how much a business is worth.
What you need to know about EV/GCI.
The ratio is similar to the price-to-book ratio, but EV/GCI is calculated on an enterprise value basis, taking into account all the company's shareholders.
GCI = Gross tangible and intangible assets before depreciation or write-offs + investments in associates + working capital.
When EV/GCI is higher than 1, the market is willing to pay a premium. If it's less than 1, it would likely be sold at a discount.
Find out more about EV/GCI.
Read our definitions of price-to-book ratio and EV/sales for more ways to value a business.