Every year, a profitable company has to decide what to do with the cash it generates: reinvest in growing the business, pay it out as dividends, buy back shares, pay down debt, or make acquisitions. Capital allocation is a report card on those decisions. A company with great products can still destroy shareholder value through bad capital allocation — overpaying for a acquisition, buying back stock at inflated prices, or reinvesting in low-return projects just to look busy. A company with average products can create enormous value through disciplined allocation — reinvesting only where returns are genuinely high, and returning cash to shareholders when they aren't. This score isn't about how much money a company makes; it's about how wisely they spend it once they have it.