Beyond Earnings: Applying the HOLT CFROI and Economic Profit Framework

Beyond Earnings is a comprehensive guide to valuation and corporate performance analysis. It provides the first useful discussion of mean-reversion in corporate profitability and growth in a finance textbook. It offers practical and elegant solutions for dealing with this empirical reality.

Key takeaways include:

• Adjust for accounting distortions to determine a company’s true economic performance
• Calculate a firm’s economic profit and CFROI
• Estimate future cash flow and economic profit streams
• Model terminal value and eliminate the perpetuity assumption
• Estimate a firm’s value