Our methodology begins with historical performance measurement by calculating a company’s historical return on capital using the Cash Flow Internal Rate of Return (CFIRR), which reflects more accurately the true economic return on capital when compared to traditional measures. At the same time, our methodology calculates the historical growth of invested capital. After assessing a firm’s historical performance, our methodology calculates enterprise value by adding inflation adjusted net invested capital to an estimate of value added. The value-added is estimated by forecasting CFIRR and capital growth over two phases. Phase 1 is a forecast for 5 years, where a fade rate is applied to CFIRR and capital growth based on fade tables based on volatility and current level. Phase 2 is a forecast for years 6 to 40, where a fade rate is applied using an economic decay or reversion to the mean. In the long-run, companies earn a CFIRR of 6% and grow capital at about 2%. The present value of value-added is calculated using the cost of capital equal to the prevailing 30-year Treasury bond rate. Risk is modeled in the cash flows and not in the cost of capital to make companies more comparable. Since companies raising capital have a choice between debt and equity, they will typically raise money at or near the 30-year Treasury bond rate. All of these concepts are incorporated into our QuickFINANCIAL suite of software providing investors and analyst powerful tools to find and evaluate the ‘true’ value of the equity of virtually any publicly traded company in North America.