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Although accounting differences exist, cash flow return on investment is analogous to the internal rate of return (IRR) concept that is widely used in capital budgeting analysis. Specifically, CFROI is the after-tax rate of return (IRR) on a company's existing assets. In principle, CFROI is that rate
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that sets the present value of the after-tax operating cash flows equal to their investment cost. l.ike any IRR, CFROI is that rate which sets a company's net present value equal to ...
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to determine if investment/product is performing adequately. The hurdle rate is the total cost of capital for the corporation calculated by a mix of
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Die
Berechnung der "Cash Flow Return On Investment"-Kennzahl als Steuerungsinstrument der wertorientierten Unternehmensführung
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201:{\displaystyle {\text{CFROI}}={\frac {{\text{Gross cash flow}}-{\text{Economic depreciation}}}{\text{Gross investment}}}}
155:, that, measured by CFROI, performance of companies tend to converge after five years in terms of their survival rates.
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investments. The CFROI must exceed the hurdle rate to satisfy both the debt financing and the investors
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Investment
Valuation: Tools and Techniques for Determining the Value of Any Asset, University Edition
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More Than You Know: Finding
Financial Wisdom in Unconventional Places (Updated and Expanded)
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291:{\displaystyle {\text{Economic depreciation}}={\frac {K_{c}}{\left(1+K_{c}\right)^{n}-1}}}
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73:{\displaystyle {\text{CFROI}}={\frac {\text{Cash flow}}{\text{Market recapitalization}}}}
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Corporate
Governance: a Board Director'S Pocket Guide: Leadership, Diligence, and Wisdom
134:{\displaystyle {\text{CFROI}}={\frac {\text{Gross cash flow}}{\text{Gross investment}}}}
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The Dark Side of
Valuation: Valuing Old Tech, New Tech, and New Economy Companies
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More Than You Know: Finding
Financial Wisdom in Unconventional Places
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The CFROI for a firm or a division can then be written as follows:
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83:For the corporation, it is essentially
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305:is the expected life of the asset and
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506:Bartley Madden (15 February 1999).
393:Foundations of Economic Value Added
363:Dr. Eric Yocam (22 February 2010).
95:financing plus investors' expected
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475:Aswath Damodaran (17 April 2012).
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87:(IRR). CFROI is compared to a
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28:Cash-flow return on investment
18:Cash flow return on investment
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390:James L. Grant (5 May 2003).
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454:. FT Press. pp. 462–.
369:. iUniverse. pp. 84–.
211:This annuity is called the
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533:(in German). GRIN Verlag.
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151:, quoted an analysis by
85:internal rate of return
66:Market recapitalization
34:model that assumes the
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189:Economic depreciation
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519:978-0-08-047642-1
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461:978-0-13-040652-1
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376:978-1-4502-0484-2
344:Return of capital
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63:Cash flow
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322:See also
314:is the
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