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

DAVID A. HOLLAND is an independent consultant who serves as a senior advisor to Credit Suisse and is an adjunct professor at the University of Cape Town Graduate School of Business. Formerly, he was a managing director at Credit Suisse based in London. David oversaw HOLT Valuation and Analytics, the research and development arm of Credit Suisse HOLT, and ran their global Custom Solutions Group.

BRYANT A. MATTHEWS is the senior director of research for Credit Suisse HOLT. He has over 20 years of professional experience valuing stocks and helping professional investors improve their stock selection process and valuation models. His research on understanding quality and fade has been adopted by professional investors around the world and led to numerous innovations in the flagship Credit Suisse HOLT Lens application.