QualityFCF CAGR 3Y#62
Receivables Turnover captures how efficiently a company converts capital into earnings.
By Javier Sanz, Founder & Lead AnalystEditorially reviewed
Last updated: Reviewed by: Javier Sanz
Formula
(FCF_now / FCF_3y_ago)^(1/3) - 1
Description
Compound annual growth rate of free cash flow over three years. FCF can be lumpy year to year due to capex timing, so the 3-year CAGR provides a smoother view of the underlying cash generation trend.
Interpretation
Above 10% is strong. Positive FCF CAGR combined with growing revenue suggests a business that scales efficiently. Negative FCF CAGR with positive earnings CAGR may indicate aggressive capex or deteriorating cash conversion.
Related metrics: Return on Equity (ROE). (Updated 2026)
Further Reading
- SEC EDGAR primary filings on Receivables Turnover- Primary source filings used to calculate Receivables Turnover.
FAQ
How is Receivables Turnover calculated?+
Receivables Turnover uses the formula: (FCF_now / FCF_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 Receivables Turnover value by sector?+
There is no single 'good' value for Receivables Turnover — context is sector-driven. compare against sector median on /screener with the Sector filter applied. The /screener exposes sector-relative percentiles for Receivables Turnover on every ticker, so you can compare against the sector median rather than the broad-market median.
Which investors use Receivables Turnover?+
Charlie Munger, Joel Greenblatt, Terry Smith cite Receivables Turnover 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 Receivables Turnover?+
Receivables Turnover can mislead in asset-light businesses where conventional capital ratios mislead. Pair Receivables Turnover 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 Receivables Turnover data?+
Visit any /stock/[ticker] page on ValueMarkers to see live Receivables Turnover data, sector percentiles, and the VMCI composite score that integrates Receivables Turnover with 119 other indicators across 100,000+ stocks. The free /screener exposes Receivables Turnover 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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