FASB CROIC, FASB Owner Earning Per Share (FOEPS), & FASB CROICOEPS Value

Excerpt:

Our evidence is that operating earnings clearly dominate operating cash flows in predicting operating cash flows over horizons of one to three years.

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https://business.columbia.edu/sites/default/files-efs/imce-uploads/CEASA/Events%20Page/fasb_earnings_beat_cash_flows_when_predicting_future_cash_flows.pdf

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Remark:

Warren Buffett has revealed Owner Earning to replace Free Cash Flow for better assessment.

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FASB has revealed Operating Profit to replace Operating Cash Flow for better assessment.

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Buffett:

Owner Earning (to replace FCF)

= Operating Cash Flow - Maintenance Capex

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FASB:

Operating Profit (To Operating Cash Flow)

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Combining both, we arrive at:

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(1)

FASB Owner Earning

= Operating Profit - Maintenance Capex

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(2)

FASB CROIC

= FASB Owner Earning ÷ (Total Equity + Total Interest Bearing Debts)

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(3)

FASB CROICOEPS VALUE

= FASB CROIC × OEPS

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Note:

FOEPS

= FASB Operating Earning Per Share