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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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Should Companies Retain "Strategic" Cash?

Harvard Business Review

This raises the question of whether retaining strategic cash makes economic sense and should be viewed as a legitimate corporate finance tool in today's environment. Often citing the maxim that "cash is king", CFOs know that strategic cash can enhance shareholder value in various ways. Arguments for Strategic Cash. It can: Save Taxes.

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How CMOs Can Get CFOs on Their Side

Harvard Business Review

This lack of an analytical approach has traditionally formed a barrier between marketing and finance. One financial services CMO told us how CFOs typically perceive his function: “We’re going to give a certain amount of dollars to those guys. They’re going to make ads and do whatever it is they do.

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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.

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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.