Cash Flow Return on Investment

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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.
References in periodicals archive ?
CFROI percentage spread correlates positively with share price and market capitalization.
CFROI Valuation, a total system approach to valuing the firm.
was 90th on the list with a 2.75 grade-point average (B on one-year stock return, a B for CFROI, a C on forecast CFROI and a B on sales growth).
An important feature of the book, not expressed by its title, is that it brings together and distinguishes among various residual income and cash flow concepts, including EVA, refined EVA (REVA), return on net assets (RONA), economic profit, and cash flow return on investment (CFROI).
The results of our CFROI analysis were one of the supporting factors in our decision to split the company into two entities last year, spinning off our chemicals business to shareowners, while concentrating on growth of our life sciences businesses, i.e., agriculture, biotechnology, pharmaceuticals and nutrition.
There was no evident consistency among the other methods; criteria cited were: landed cost analysis, price earnings ratio, incremental PBT/EPS profile, economic value added, a CFROI measure and shareholder value analysis.
works mainly with data obtained from financial accounting The modern the methods are based simple and approach (EVA, on value management comprehensible MVA, CFROI) expression of a company's success can be also used can be used to link for certain complex operative and managerial models strategic management market-recognized value Complex an evaluation an evaluation of managerial models of a company's overall overall performance (e.g.
(1998), CFROI Cash Flow Return on Investment Valuation: A Total System Approach to Valuing a Firm.
Tickers featured: ADBE, AMG, AMGN, AOL, BAC, BGEN, BMY, CFROI, CP, CSCO, DELL, EC, EMC, GTW, ICI, INTC, KBH, MAS, MAY, MDT, NSC, OMC, ORLY, PFE, PHA, PRGO, SPF, SUNW, TLB, TXN, UTX, WMT.
This may explain the rise in popularity in various metrics such as the balanced scorecard, six sigma programs, return on committed capital, and CFROI among others.
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.
The typical concepts of the value management is the economic valued added (EVA), market value added (MVA) or operating return of investments (CFROI).