To emphasize the importance of continually seeking and needing feedback information in order to test and judge the reliability of conceptual beliefs and to correct erroneous beliefs, we use assumptions as a synonym for knowledge when discussing what knowledge is and how it improves. In other contexts, assumption has its usual meaning purported facts or causal descriptions accepted as reliable with little or no supporting empirical evidence for such.

The firm's assets are divided into operating assets used in the firm's businesses and non-operating assets. CFROIs and net cash receipts are based on operating assets. Many accounting and inflation adjustments are made to standard financial-statement data in calculating an amount of CFROI-operating assets.

CAPM is shorthand for capital asset pricing model. The CAPM specifies the expected return on a specific stock as the expected return on a risk-free asset plus a risk premium which is the product of beta multiplied by the estimated excess return for the general stock market over the risk-free rate. Beta is a measure of the sensitivity of a specific stock's price to movements in the general stock market. Betas greater than 1.0 indicate greater sensitivity than the market, and betas less than 1.0 indicate the opposite.

CFROI is an abbreviation for cash flow return on investment and is used to refer to both (1) the complete CFROI valuation model and (2) the CFROI performance metric, which is a key component of the...