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A Refresher on Cost of Capital

Harvard Business Review

You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital. What is the cost of capital? “The cost of capital is simply the return expected by those who provide capital for the business,” says Knight. Further Reading.

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Providing Earnings Guidance? Think Again

Harvard Business Review

Less Volatility in Stock Price: The net effect of providing guidance is arguably a less volatile stock price, which can result in a lower beta and a lower cost of capital. CFOs can be similarly transparent concerning the key performance metrics that will drive future revenue and earnings. FD) constraints.

CFO 11
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A Refresher on Marketing ROI

Harvard Business Review

Some companies establish a threshold for MROI that takes into account its risk tolerance and cost of capital, below which they are hesitant to make investments. A CFO might just see marketing expenses walking out the door and not a corresponding build-up of cash flows and assets,” Avery explains.

ROI 8
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Should Companies Retain "Strategic" Cash?

Harvard Business Review

Often citing the maxim that "cash is king", CFOs know that strategic cash can enhance shareholder value in various ways. As long as the CFO can stipulate that the company does not intend to repatriate the cash, it avoids the incremental tax that will be levied due to the territorial system of U.S. It can: Save Taxes.

Company 13
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How CMOs Can Get CFOs on Their Side

Harvard Business Review

In our work with clients across dozens of sectors over more than five years, we have found that the strongest CMO/CFO partnerships develop when both parties undertake five actions: 1. CMOs need to start building this relationship by having a clear understanding of what CFOs expect.

CFO 8
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The Three Decisions You Need to Own

Harvard Business Review

At many companies the total cash investment in acquisitions, R&D, and fixed assets has not earned back its cost of capital after adjusting for the time lag in realizing incremental benefits. As Keith Sherin, then GE’s CFO put it, “This is where the growth is. We are shifting our center of gravity.”

P&L 9
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Case Study: A Short-Seller Crashes the Party

Harvard Business Review

Densmor, Terranola’s CFO, saw those words on Twitter about one minute after Hughes had uttered them. As CFO, A.J. With the company’s share price sinking and its cost of capital rising, those deals might have to be put on hold. An agitated Henry burst into his office only a few seconds later. Confident words.