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By Bartley Madden, Partner at HOLT Value Associates, focusing on research in economics and finance, with many published articles. Formerly an investment
manager at Harbor Capital Advisors, he is a co-founder of Callard, Madden & Associates, where he developed links between inflation-adjusted
corporate performance measures and stock prices, while consulting with large industrial companies.
Description 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
Audience
Investment analysts and managers; Corporate finance departments; Investor relations professionals; Fund trustees, CEOs; CFOs; students of masters courses in finance and investment
Contents 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
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