Test 2
We favour CROIC because:
It focuses on actual cash generation, not accounting profits (unlike ROIC based on NOPAT).
It uses Cash from Operations net of interest and tax, capturing true "owners’ earnings."
By deducting maintenance capex, we isolate the cost of sustaining operations—something most investors overlook when they lump all capex together.
This clarity lets us distinguish between growth that's real and repeatable, and that which is capital-intensive or unsustainable.
It focuses on actual cash generation, not accounting profits (unlike ROIC based on NOPAT).
It uses Cash from Operations net of interest and tax, capturing true "owners’ earnings."
By deducting maintenance capex, we isolate the cost of sustaining operations—something most investors overlook when they lump all capex together.
This clarity lets us distinguish between growth that's real and repeatable, and that which is capital-intensive or unsustainable.