LexiconEconomics
Capital Efficiency Ratio (CER)
نسبة كفاءة رأس المال
Definition
The Capital Efficiency Ratio (CER) is the year-on-year increase in gross profit divided by the commercial capital invested to produce it. The Doctrine floor is 1.5x: below it, a group is buying revenue rather than building profit. The CFO reviews it quarterly as one of the ten board-dashboard metrics.
In plain words
How much extra profit each riyal of commercial spending brought in over the year.
Also searched as
- CER
- capital efficiency
- return on commercial capital
- نسبة كفاءة رأس المال
Formula
CER = Increase in gross profit (year on year) ÷ Commercial capital invested
Canonical thresholds
| Threshold | Verdict |
|---|---|
| ≥ 1.5x | At or above the floor |
| < 1.5x | Buying revenue, not building profit |
Source: Doctrine §2 · Definitions · Doctrine §6 · Doctrine thresholds · Doctrine §6 · The Capital Efficiency Ratio
Example
Illustrative example · hypothetical figures
A group invests SAR 2,000,000 of commercial capital in a year and gross profit rises by SAR 3,000,000: CER = 1.5x, exactly at the floor.
Where it is used
In the Doctrine and the Playbook
Related terms
Try the Branch Gate on your numbers
How to cite this definition
Alhajj, S. (2026). “Capital Efficiency Ratio”. In The Revenue Engineering Lexicon, version 1.0. Riyadh. https://seiflden.com/lexicon/capital-efficiency-ratio/