Cash Return on Inflation Adjusted Gross Investment Ratio

Cash Return on Inflation Adjusted Gross Investment allows to assess the efficiency of long-term investments and determine the effect of depreciation due to inflation.

Alternative names of Cash Return on Inflation Adjusted Gross Investment:

  • Cash Return on Inflation Adjusted Gross Investment

What Does Cash Return on Inflation Adjusted Gross Investment Show?

Indicator shows how much cash is generated during the implementation of the investment program, taking into account the impact of inflation. This indicator is used to understand how well the investment funds are used. For some investment companies, CROIGI provides information on the rate of return. It is advisable to use it when the country’s economy experiences rapid pace of inflation.

Formula of Cash Return on Inflation Adjusted Gross Investment

The coefficient is calculated as follows:

CROІGI = Gross cash flow after tax / Gross inflation-adjusted investments

Gross cash flow after tax is the sum of all operating cash flows adjusted for taxes.
Gross investment is the sum of all investments carried out during the investigated period.

All investments mean the initial value of property and capital investment. It is the temporary value of investments, which will be credited to the value of fixed assets.

Normative Value of Cash Return on Inflation Adjusted Gross Investment

The higher the value of the indicator, the better for the enterprise. The CROIGI indicator takes into account not only the current value of assets but also the value of assets that were created during previous reporting periods. Impact of inflation on the property value is not taken into account.