Would you rather have a 20% return on a $100,000 base of invested capital or 10% on $20 billion?

CFOs are capital allocators at heart. Their decisions are measured on multiple scoreboards: as a percentage, as a real dollar amount, and as pure cash flow.

This guide draws on my podcast with Tony Boor, CFO of Blackbaud, a software company that powers nonprofits, charities, and educational institutions. Blackbaud generated over $1.1 billion in revenue last year and is one of the most valuable vertical software companies in the world.

Tony explained that he relies on three metrics to measure the company’s capital efficiency at scale:

  1. Return on Invested Capital (ROIC)

  2. Economic Value Added (EVA)

  3. Residual Cash Earnings

Today, we'll explore all three metrics and compare their outputs using a real scenario.

For anyone looking to move beyond managing budgets to making strategic capital allocation decisions, this guide will help you get there.

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