{"product_id":"beyond-earnings-applying-the-holt-cfroi174-and-economic-profit-framework-9781119440482","title":"Beyond Earnings  Applying the HOLT CFROI174 and","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003eIntroduction xix\u003c\/p\u003e \u003cp\u003eThe Pricing Puzzle: Foundational HOLT Concept and a Key to Better Valuation xix\u003c\/p\u003e \u003cp\u003eOverview of Book Chapters xxvi\u003c\/p\u003e \u003cp\u003eWho Are We and What Do We Hope to Achieve xxviii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eI Financial Performance Assessment\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Never Forget the Golden Rule: Pursue Strategies with Positive NPV 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 3\u003c\/p\u003e \u003cp\u003eIntroduction 4\u003c\/p\u003e \u003cp\u003eWhat Do Corporate Financial Managers Do During the Day? 6\u003c\/p\u003e \u003cp\u003eWhat Is Value? 8\u003c\/p\u003e \u003cp\u003eThe Golden Rule of Financial Decision Making 12\u003c\/p\u003e \u003cp\u003eBack-of-the-Envelope Basics 15\u003c\/p\u003e \u003cp\u003eIs the NPV Rule Foolproof? 20\u003c\/p\u003e \u003cp\u003eThe Price of Short-Termism 22\u003c\/p\u003e \u003cp\u003eThinking Clearly about Actions, Reactions, and Value 28\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 The Flying Trapeze of Performance Metrics 31\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 31\u003c\/p\u003e \u003cp\u003eMeasures of Corporate Performance 32\u003c\/p\u003e \u003cp\u003eReturn on Equity 33\u003c\/p\u003e \u003cp\u003eWhat about Debt and Leverage? 36\u003c\/p\u003e \u003cp\u003eReturn on Assets 39\u003c\/p\u003e \u003cp\u003eReturn on Invested Capital 39\u003c\/p\u003e \u003cp\u003eP\/E as a Valuation Metric and Discounted Cash Flow Valuation Approach 44\u003c\/p\u003e \u003cp\u003eHallmarks of a Sound Economic Performance and Valuation Model 51\u003c\/p\u003e \u003cp\u003eChapter Appendix 53\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Accounting to Cash Flow Return on Investment 57\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 57\u003c\/p\u003e \u003cp\u003eIs CFROI a Better Measure of Performance? 58\u003c\/p\u003e \u003cp\u003eReturn on Invested Capital (ROIC) 62\u003c\/p\u003e \u003cp\u003eCash Return on Gross Assets (CROGA) 63\u003c\/p\u003e \u003cp\u003eCash Flow Return on Investment (CFROI) 63\u003c\/p\u003e \u003cp\u003eCFROI Adjustments Using Amazon’s 2013 Annual Report 65\u003c\/p\u003e \u003cp\u003eInflation-Adjusted Gross Investment 66\u003c\/p\u003e \u003cp\u003eDepreciating Assets 68\u003c\/p\u003e \u003cp\u003eGross Plant Recaptured 81\u003c\/p\u003e \u003cp\u003eTotal Depreciating Assets 81\u003c\/p\u003e \u003cp\u003eNon-Depreciating Assets 82\u003c\/p\u003e \u003cp\u003eAsset Life 89\u003c\/p\u003e \u003cp\u003eGross Plant Asset Life 90\u003c\/p\u003e \u003cp\u003eLife of Capitalized Operating Leases 91\u003c\/p\u003e \u003cp\u003eCapitalized R\u0026amp;D Life 91\u003c\/p\u003e \u003cp\u003eCalculating the Life of Depreciating Assets 91\u003c\/p\u003e \u003cp\u003eGross Cash Flow 94\u003c\/p\u003e \u003cp\u003eNet Income after Tax 95\u003c\/p\u003e \u003cp\u003eDepreciation and Amortization 97\u003c\/p\u003e \u003cp\u003eInterest Expense 97\u003c\/p\u003e \u003cp\u003eRental Expense 98\u003c\/p\u003e \u003cp\u003eResearch and Development Expense 98\u003c\/p\u003e \u003cp\u003eNet Monetary Asset Holding Gain 99\u003c\/p\u003e \u003cp\u003eFIFO Profits 99\u003c\/p\u003e \u003cp\u003eStock Compensation Expense 100\u003c\/p\u003e \u003cp\u003ePension Expense 101\u003c\/p\u003e \u003cp\u003eMinority Interest 102\u003c\/p\u003e \u003cp\u003eSpecial Items 102\u003c\/p\u003e \u003cp\u003eCFROI Calculation for Amazon 103\u003c\/p\u003e \u003cp\u003eUnderstanding the Relative Wealth Chart 105\u003c\/p\u003e \u003cp\u003eA Comment on Goodwill 106\u003c\/p\u003e \u003cp\u003eChapter Appendix: Gross Plant Recaptured 109\u003c\/p\u003e \u003cp\u003e\u003cb\u003eII Discounted Cash Flow and Economic Profit Valuation\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 What’s It Worth? Valuing the Firm 113\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 113\u003c\/p\u003e \u003cp\u003eA Review of Conventional Valuation Approaches 114\u003c\/p\u003e \u003cp\u003eThe Entity Free Cash Flow Approach 114\u003c\/p\u003e \u003cp\u003eValuing the End of the Line 118\u003c\/p\u003e \u003cp\u003eEconomic Profit Approach 124\u003c\/p\u003e \u003cp\u003eWhat Is Fade? 127\u003c\/p\u003e \u003cp\u003eFade in Economic Profit Equation 129\u003c\/p\u003e \u003cp\u003eHOLT Approach to FCFF Valuation 130\u003c\/p\u003e \u003cp\u003eNominal Gross Cash Flow 130\u003c\/p\u003e \u003cp\u003eTotal Investment 132\u003c\/p\u003e \u003cp\u003eDebt and Equivalents 136\u003c\/p\u003e \u003cp\u003eValuing Different Forecast Scenarios for Amazon in the HOLT Framework 138\u003c\/p\u003e \u003cp\u003eValuing Air Liquide in HOLT Lens 145\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Quantifying the Value and Risk of a Company’s CAP 151\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 151\u003c\/p\u003e \u003cp\u003eIntroduction 152\u003c\/p\u003e \u003cp\u003eThe Worst Investment I Ever Made 154\u003c\/p\u003e \u003cp\u003eQuantifying the Magnitude and Sustainability of CAP 158\u003c\/p\u003e \u003cp\u003eThought Experiment: The Valuation of Core Unlimited 164\u003c\/p\u003e \u003cp\u003eThe Probability of Permanent Disruption 168\u003c\/p\u003e \u003cp\u003eThe Characteristics of Competitive Advantage 169\u003c\/p\u003e \u003cp\u003eFade Is a Value Driver 172\u003c\/p\u003e \u003cp\u003eThe Fundamental Pricing Model 172\u003c\/p\u003e \u003cp\u003eThe Value Driver Tree 174\u003c\/p\u003e \u003cp\u003eROIC 174\u003c\/p\u003e \u003cp\u003eInvestment Growth 175\u003c\/p\u003e \u003cp\u003eFade 175\u003c\/p\u003e \u003cp\u003eCost of Capital 177\u003c\/p\u003e \u003cp\u003eInvestment Growth Is a Value Driver 177\u003c\/p\u003e \u003cp\u003eApplying the Fundamental Pricing Model 178\u003c\/p\u003e \u003cp\u003eFinal Thoughts for the Moment 183\u003c\/p\u003e \u003cp\u003eChapter Appendix 184\u003c\/p\u003e \u003cp\u003eValuation Mathematics 184\u003c\/p\u003e \u003cp\u003eInputs for Valuing Macy’s and Assessing Its Competitive Advantage Period 186\u003c\/p\u003e \u003cp\u003eA Detour Through the Twilight Zone: Making Sense of P\/E 187\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 HOLT Economic Profit 191\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 191\u003c\/p\u003e \u003cp\u003eIntroduction 193\u003c\/p\u003e \u003cp\u003eCalculating CFROI as a Ratio 196\u003c\/p\u003e \u003cp\u003eHOLT Economic Profit 200\u003c\/p\u003e \u003cp\u003eThe Power of Simplicity: Spread, Fade, and Growth in an EP Framework 204\u003c\/p\u003e \u003cp\u003eUsing Economic Profit to Measure the Value of Acquisitions 205\u003c\/p\u003e \u003cp\u003eDecomposing Value Creation into Delta EP Components 208\u003c\/p\u003e \u003cp\u003eWhat about Goodwill? 210\u003c\/p\u003e \u003cp\u003eCase Study: Danaher Corporation 212\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Risk, Reward, and the HOLT Discount Rate 217\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 217\u003c\/p\u003e \u003cp\u003eRisk, Return, and Diversification 218\u003c\/p\u003e \u003cp\u003eWhat Is Risk? 221\u003c\/p\u003e \u003cp\u003eHow Do Corporate Managers Discount Cash Flows to Present Value? 223\u003c\/p\u003e \u003cp\u003eHow Should Investors Think about Risk When Discounting Cash Flows? 223\u003c\/p\u003e \u003cp\u003eHow Large Is the Equity Risk Premium (ERP)? 226\u003c\/p\u003e \u003cp\u003eShould I Use the Arithmetic or Geometric Average? 228\u003c\/p\u003e \u003cp\u003eOther Risk Factors to Consider 228\u003c\/p\u003e \u003cp\u003eIntroduction to the HOLT Approach of Estimating a Firm’s Discount Rate 231\u003c\/p\u003e \u003cp\u003eRelating the HOLT Discount Rate and Framework to CAPM and APV 237\u003c\/p\u003e \u003cp\u003eWhat Type of Discount Rate Is the HOLT Cost of Capital? 238\u003c\/p\u003e \u003cp\u003eValuation Method Equivalence 239\u003c\/p\u003e \u003cp\u003eCapital Cash Flows 243\u003c\/p\u003e \u003cp\u003eCost of Capital and Its Relationship to Debt 243\u003c\/p\u003e \u003cp\u003eChapter Appendix: Do Equity Discount Rates Mean Revert? 245\u003c\/p\u003e \u003cp\u003eGeneral Observations about Annual Changes in the U.S. Discount Rate 247\u003c\/p\u003e \u003cp\u003eHow Does the Monthly Change in the U.S. Discount Rate Behave? 249\u003c\/p\u003e \u003cp\u003eDoes the Discount Rate Mean-Revert? 250\u003c\/p\u003e \u003cp\u003eHow Do Changes in the Discount Rate Manifest in the Equity Risk Premium? 252\u003c\/p\u003e \u003cp\u003eThe Bitter Truth about Mean Reversion 253\u003c\/p\u003e \u003cp\u003e\u003cb\u003eIII Value Driver Forecasting\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 The Competitive Life-Cycle of Corporate Evolution 257\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 257\u003c\/p\u003e \u003cp\u003eIntroduction 258\u003c\/p\u003e \u003cp\u003eWhat Is Fade? 262\u003c\/p\u003e \u003cp\u003eThe Competitive Life-Cycle 262\u003c\/p\u003e \u003cp\u003eDetermining a Firm’s Life-Cycle Position 264\u003c\/p\u003e \u003cp\u003eQuestion Marks (Early Life-Cycle) 265\u003c\/p\u003e \u003cp\u003eStars 267\u003c\/p\u003e \u003cp\u003eCash Cows 270\u003c\/p\u003e \u003cp\u003eDogs (Turnarounds or Restructuring) 274\u003c\/p\u003e \u003cp\u003eFinal Remarks on the Competitive Life-Cycle 276\u003c\/p\u003e \u003cp\u003eEssential Facts about the Competitive Life-Cycle 278\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 The Persistence of Corporate Profitability 281\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 281\u003c\/p\u003e \u003cp\u003eLong-Term Real Return on Investment 282\u003c\/p\u003e \u003cp\u003eThe Long-Term Real Required Rate of Return 283\u003c\/p\u003e \u003cp\u003eMeasuring Persistence 286\u003c\/p\u003e \u003cp\u003eTransition Matrices as a Means of Quantifying Fade 286\u003c\/p\u003e \u003cp\u003eIndustry Persistence: Does Industry Matter? 287\u003c\/p\u003e \u003cp\u003eReversion to the Mean 290\u003c\/p\u003e \u003cp\u003eCompetitive Advantage and Its Effect on Fade 292\u003c\/p\u003e \u003cp\u003eIndustry CFROI Persistence 295\u003c\/p\u003e \u003cp\u003eDoes CFROI Persistence Vary over Time? 296\u003c\/p\u003e \u003cp\u003ePutting It All Together: Developing a Mean-Reverting Forecast Model 297\u003c\/p\u003e \u003cp\u003eConclusion 300\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Forecasting Growth 303\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 303\u003c\/p\u003e \u003cp\u003eMedian Real Asset Growth Rate 306\u003c\/p\u003e \u003cp\u003eThe Average Growth Rate as Companies Mature 307\u003c\/p\u003e \u003cp\u003eIs Corporate Growth Mean-Reverting? 309\u003c\/p\u003e \u003cp\u003eThe Sustainability of Growth 312\u003c\/p\u003e \u003cp\u003eForecasting Growth 313\u003c\/p\u003e \u003cp\u003eMeasuring a Firm’s Sustainable Growth Rate 313\u003c\/p\u003e \u003cp\u003eWhy HOLT Uses a Normalized Growth Rate 315\u003c\/p\u003e \u003cp\u003eForecasting Growth: Near-Term and Long-Term Dynamics 317\u003c\/p\u003e \u003cp\u003eConclusions 319\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Evaluating Market Expectations 321\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eKey Learning Points 321\u003c\/p\u003e \u003cp\u003eThe Relative Wealth Chart as a Decision Aid for Efficiently Assessing Stock Opportunities 322\u003c\/p\u003e \u003cp\u003eDistilling Expectations from a Stock Price 323\u003c\/p\u003e \u003cp\u003eCan It Beat the Fade? 326\u003c\/p\u003e \u003cp\u003eThe Green Dot 328\u003c\/p\u003e \u003cp\u003eThinking about Expectations at Different Life-Cycle States 332\u003c\/p\u003e \u003cp\u003eWhy the Green Dot Is So Helpful 336\u003c\/p\u003e \u003cp\u003ePicking Stocks Across the Life-Cycle 340\u003c\/p\u003e \u003cp\u003eQuestion Mark (Tesla) 340\u003c\/p\u003e \u003cp\u003eStar (Amazon) 343\u003c\/p\u003e \u003cp\u003eeCAP (Nestlé) 346\u003c\/p\u003e \u003cp\u003eCash Cow (DuPont) 348\u003c\/p\u003e \u003cp\u003eDog (BP) 349\u003c\/p\u003e \u003cp\u003eFinal Remarks 353\u003c\/p\u003e \u003cp\u003eChapter Appendix: Gauging Expectations Using PVGO 356\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Closing Thoughts 359\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIndex 363\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default Title","offer_id":48866395685207,"sku":"9781119440482","price":31.2,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1739\/5799\/files\/9781119440482.jpg?v=1722278451","url":"https:\/\/bookcurl.com\/products\/beyond-earnings-applying-the-holt-cfroi174-and-economic-profit-framework-9781119440482","provider":"Book Curl","version":"1.0","type":"link"}