CFROI Valuation
- 1st Edition - March 8, 1999
- Author: Bartley Madden
- Language: English
- Hardback ISBN:9 7 8 - 0 - 7 5 0 6 - 3 8 6 5 - 4
- eBook ISBN:9 7 8 - 0 - 0 8 - 0 4 7 6 4 2 - 1
What generates shareholder value? How can it be evaluated? How can it influence investment decisions and corporate strategy? Cash Flow Return On Investment answers all these… Read more
What generates shareholder value? How can it be evaluated? How can it influence investment decisions and corporate strategy? Cash Flow Return On Investment answers all these questions by detailing the pioneering financial research carried out by HOLT Value Associates, the leading consultancy in the field. Read this book if you want to find out what really drives the wealth generation in any business, allowing you to pick which equities will succeed and which strategic initiatives are destined for high returns. The CFROI model is an essential tool for professionals working in finance and corporate strategy. It clarifies how economic value is created in a firm and acts as a reliable guide to:* making investment decisions* taking key strategic decisions* understanding economic value
Shows how to judge and compare individual equities across markets and company sectorsCutting edge theory and practiceThe leading book about shareholder value authored by one of the world's leading consultancies in the field
Investment analysts and managers; Corporate finance departments; Investor relations professionals; Fund trustees, CEOs; CFOs; students of masters courses in finance and investment
Preface; Summary - purpose; main messages; Key Criteria For Assessing Valuation Models - background; valuation models and the big picture; shareholder value inside the firm; seven key criteria; Basic Valuation Elements - pricing equation; net cash receipt (ncr) stream; economic performance-achieved ROI; dcf valuation models; CFROI Life Cycle - pricing equation revisited; managerial skill and competition; measuring skill-firm's track record; time series of cfroi; cfroi life cycle; sustainable asset growth; life cycle examples;CFROI Valuation Model - accuracy versus simplicity-no free lunch; holt's cfroi valuation model; company example-briggs & stratton; CFROI Fade Rates - competition and skill; measurable characteristics; empirical results; Market-Derived Discount Rate And Risk Differentials - why disregard capm and beta?; forward-looking discount rate; discount rate as an integral part of valuation model; aggregate composition; leverage and size; risk differentials; Valuation Sensitivity - existing assets; future investments; alternative levels of firm's future performance; plausibility of forecast performance; corporate performance benchmarks; Corporate Performance Scorecards - two parts to performance; holts dual grade (tm) performance scorecard; problems with shareholder returns; comparison to stern stewart's mva; Intelligence Gathering - stock prices contain astute forecasts; near-term performance; long-term performance; critique one's level of knowledge; machinery industry; buy/sell investment decisions; Total System Perspective For Valuation Analysis - advantages and limitations of the cfroi valuation model; limitations of accounting statements; balanced scorecards; lean thinking; strategic planning-marrying skill and growth; intellectual capital; implications of thermo electron; experimental financial statements; Critical Thinking - strongly held beliefs and independent 'realities'; methodology of positive economics; post modern finance; theory of the business; theory of constraints; the spirit in the walls; strategic audit for the board of directors; Technical Details - economic cash flow; dcf valuation analysis; hershey foods' calculations; briggs & stratton's valuation audit; empirical feedback-warranted versus actual stock prices; improving the model; Conventional Valuation Models - residual income; repackaged residual income-eva; confusion from free cash flow (fcf); fcf and eva; comparisons to cfroi valuation model; Conclusions - seven criteria revisited; advanced research; Epilogue;Endnotes;Appendix; holt's dualgrade performance scorecard, u.s. industrial/service films
- Edition: 1
- Published: March 8, 1999
- Language: English
BM
Bartley Madden
He has a B.S. in Mechanical Engineering from the University of Southern California and an MBA from the University of California-Berkeley. He has been published in economics, finance, and engineering journals, and in the Wall Street Journal and other business publications. Bart's work on the CFROI valuation model dates back to the late 1960s. The Journal of Investing has published two of his recent articles. Appearing in the Summer 1996 issue, "The CFROI Life Cycle" is an empirical study that underpins the CFROI-model's fade rates. "The CFROI Valuation Model," published in the Spring 1998 issue, presents empirical support and argument for the CFROI-model's market-derived discount rate as superior to the conventional CAPM/beta approach used for estimating firms' costs of capital.
Affiliations and expertise
Partner, HOLT Value AssociatesRead CFROI Valuation on ScienceDirect