CFROI (Cash Flow Return On Investment)
CFROI (Cash Flow Return On Investment) / CFROI (Cash Flow Return On Investment)
CFROI is computed as follows:
The CFROI is a performance measurement ratio for managers who can influence and thus also take the responsibility for all relevant financial aspects of their organisational unit, except investments and depreciation and also financial decisions (i.e. decisions that influence the financial structure of the company as shown on the right side of the balance sheet). The ratio’s objective is to commit the manager so that he realises high market shares (sales volume) achieved with low controllable costs and with a prudent investment in (interest costing) assets. The CFROI is therefore mainly suitable for managers of profit centers and of (affiliated) companies that do not yet have well-defined guidelines for depreciation and where investment budgets and financing structure are decided at top management or corporate level.