APPLICATION OF CASH FLOW RETURN ON INVESTMENT IN TERMS OF FINANCIAL PERFORMANCE MEASUREMENT
Journal Title: Challenges of the Knowledge Society - Year 2016, Vol 6, Issue 0
Abstract
Value based financial performance measures are generally presented as a major improvement over the traditional performance measures. By including a company´s cost of capital in their calculation they could be applied in order to evaluate the value creating potential of a company. On the other hand, proponents of modern financial measures highlight their correlation with company´s share return. Economic value added (EVA), market value added (MVA), cash flow return on investment (CFROI) among others represent the group of modern measures of company´s financial performance. The aim of this paper is to investigate the use of CFROI as a measure of company´s financial performance. The paper outlines the calculation of this measure and also evaluates its incremental information content above selected traditional measures.
Authors and Affiliations
Kristína Jančovičová BOGNÁROVÁ
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