CFROI

cash Flow return on Investment (CFROI), originally developed by HOLT Value Associates (since Jan 2002 part of CFSB), is an Economic Profit based corporate performance/valuation framework used by portfolio managers and corporations on EP basis. CFROI is normally calculated on an annual basis and is compared to an inflation-adjusted cost of capital to determine whether a corporation has earned returns superior to its costs of capital. cash Flow return on Investment can help compare across companies with disparate asset compositions, across borders and time. An advantage of CFROI is that it ties performance measurement to the factor that capital markets prize most: the ability of a corporation to generate cashflow. Also CFROI is inflation-adjusted. cash Flow return on Investment (CFROI) can be calculated at divisional (Strategic Business Unit) level and can also be used for private held companies.