QualityRev CAGR 3Y#55
Operating Cash Flow to Debt measures how efficiently a company converts capital into earnings.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
(Revenue_now / Revenue_3y_ago)^(1/3) - 1
Description
Compound annual growth rate of revenue over three years. CAGR smooths out year-to-year volatility and shows the sustainable underlying growth trend. Three years is long enough to filter out one-time events but short enough to reflect current business trajectory.
Interpretation
Above 10% is strong. Accelerating CAGR (3Y higher than 5Y) is a positive signal. Decelerating growth is common as companies scale but should be monitored. Compare to the company's reinvestment rate to assess whether growth is capital-efficient.
Related metrics: Return on Equity (ROE), Return on Assets (ROA), Return on Invested Capital (ROIC). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Operating Cash Flow to Debt (OCF/Debt)- Primary source filings used to calculate Operating Cash Flow to Debt (OCF/Debt).
FAQ
How is Operating Cash Flow to Debt calculated?+
Operating Cash Flow to Debt uses the formula: (Revenue_now / Revenue_3y_ago)^(1/3) - 1. compare against sector median on /screener with the Sector filter applied. ValueMarkers refreshes the calculation within 24 hours of each new SEC filing using SEC EDGAR 10-K + 10-Q filings (segment-level disclosures).
What is a good Operating Cash Flow to Debt value by sector?+
There is no single 'good' value for Operating Cash Flow to Debt — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Operating Cash Flow to Debt on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Operating Cash Flow to Debt?+
Charlie Munger, Joel Greenblatt, Terry Smith cite Operating Cash Flow to Debt as a key input to to find compounders with durable economic moats. The academic anchor is Greenblatt (2005) Magic Formula and Mauboussin (2014). ValueMarkers weights this within the Quality pillar of the VMCI score (30% of total).
What are the limitations of Operating Cash Flow to Debt?+
Operating Cash Flow to Debt can mislead in asset-light businesses where conventional capital ratios mislead. Pair Operating Cash Flow to Debt with at least two cross-checks from other VMCI pillars — for example, free cash flow trend, balance-sheet quality, and earnings consistency — before drawing a single-metric conclusion.
Where can I see live Operating Cash Flow to Debt data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Operating Cash Flow to Debt data, sector percentiles, and the VMCI composite score that integrates Operating Cash Flow to Debt with 119 other indicators across 100,000+ stocks. The free /screener exposes Operating Cash Flow to Debt as a filterable column.
Related Quality Indicators
Return on Equity (ROE)Op Margin
Return on Equity measures how efficiently a company converts capital into earnings.
Return on Assets (ROA)Net Margin
Return on Assets is the metric used to how efficiently a company converts capital into earnings.
Return on Invested Capital (ROIC)EBITDA Margin
Return on Invested Capital measures how efficiently a company converts capital into earnings.
Return on Capital Employed (ROCE)FCF Margin
Return on Capital Employed is the metric used to how efficiently a company converts capital into earnings.
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