Beyond Earnings: Applying the HOLT CFROI and Economic Profit FrameworkBeyond Earnings is targeted at investors, financial professionals, and students who want to improve their ability to analyze financial statements, forecast cash flows, and ultimately value a company. The authors demonstrate that reported earnings are easily gamed by accounting shenanigans and reveal how commonly used profitability measures such as return on equity can be misleading. Because earnings and P/E ratios are too unreliable for valuation, this book takes you beyond earnings and shows you how to apply the HOLT CFROI and Economic Profit framework in a step-by-step manner. A better measure of profitability results in improved capital allocation decisions and fundamental valuations. This ground-breaking book offers the first practical in-depth discussion of how profitability and growth fade, and shows how to put this information to work right away. The authors introduce their trailblazing Fundamental Pricing Model which includes fade as an adjustable value driver and can be used to value the impact of business model disruption. As the authors explain, the key to superior stock picking is understanding the expectations embedded in a stock’s price and having a clear view of whether the company can beat those expectations. The HOLT framework has been rigorously field tested for over 40 years by global investment professionals to help them make better stock picks and by corporate managers to understand the expectations embedded in their stock price. Beyond Earnings is an indispensable guide for investors who want to improve their odds of outperforming the competition. |
From inside the book
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... Trapeze of Performance Metrics 31 Key Learning Points 31 Measures of Corporate Performance 32 Return on Equity 33 What about Debt and Leverage? 36 Return on Assets 39 Return on Invested Capital P/E as a Valuation Metric and xi Contents.
... Return on Invested Capital (ROIC) Cash Return on Gross Assets (CROGA) Cash Flow Return on Investment (CFROI) CFROI Adjustments Using Amazon's 2013 Annual Report Inflation-Adjusted Gross Investment Depreciating Assets Gross Plant ...
... 136 138 145 151 151 152 154 158 164 168 169 172 172 Fade Cost of Capital Investment Growth Is a Value Driver. The Value Driver Tree ROIC Investment Growth 174 174 175 223 226 228 228 'Adam Samson, Mamta Badkar, and Nicole xiii Contents.
... ROIC CFROI g: Growth in book equity Growth in invested capital Real growth in IAGI r: Cost of equity, r. Weighted-average cost of Real cost of capital, HOLT capital (WACC) DR f ROE fades to r. ROIC fades to WACC CFROI fades to HOLT DR ...
... Return on invested capital (ROIC) is a better measure of profitability but liable to accounting distortions. Although it takes more effort to calculate cash flow return on investment (CFROI), it is a comprehensive measure of a company's ...
Contents
Discounted Cash Flow and Economic Profit Valuation | 111 |
Value Driver Forecasting | 255 |
Index | 363 |
EULA | 384 |