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Cash Flow Return on Investment

   Also found in: Acronyms, Wikipedia 0.01 sec.
Cash Flow Return on Investment
A model of determining the value of a company that assumes that the market sets prices based on cash flow instead of earnings. It is calculated thusly:

CFROI = Cash flow / Total investment.


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For the three-year rolling program the metrics are EPS growth and cash flow return on investment.
Looking at how well certain suppliers are doing in terms of their cash flow return on investment, a metric that was developed by Holt Value Associates, Hoffecker observes that Lear, Dura, and Johnson Controls are making the most of their assets, which he says is a whole lot more important than looking at margins.
It might be return on net assets (RONA), shareholder value (SVA), cash flow return on investment (CFROI) or economic value added (EVA(r) -- anything that gives managers insight into which components of their business, products or business units create or diminish shareholder value.
 
 
 
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