In this fourth-annual list, looked at an independent source the 500 largest companies, as determined by annual revenue, and gave them a letter grade according to their one-year stock-market return, three-year average cash-flow return on investment (CFROI
) and the forecast CFROI
, and sales growth during the last year.
The above methods with slight variation are used in many brand name products such as Stern Stewarts EVA [TM], Holt Value Associates CFROI
[TM] and McKinsey's Economic Profit Model [TM] (Lee, 1999).
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.
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.
Includes valuation practices across the life cycle of companies and emphasizes value enhancement measures, such as EVA and 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
More modern indicators, such as EVA, MVA or CFROI
, are preferred for performance measurement by 39 % of respondents and 29 % uses TQM conception as a tool for performance measurement.
EVA (Economic Value Added), CVA (Cash Value Added), MVA (Market Value Added), CFROI
(Cash Flow Return on Investment), SVA (Shareholder Value Added) a ine.