Harvard Business Review

APRIL 5, 2017

However, higher accruals can reflect either innocuous aspects of certain business models, such as in the construction industry, where the time lag between earning income and realizing cash is long, or that growing firms retain higher working capital to meet greater current and future customer demand.

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

APRIL 16, 2012

Strategic cash also can be used to finance long-term reinvestment programs in the business—which is especially valuable to companies in capital-intensive industries (e.g., energy or telecom) or research-intensive industries (e.g., Allow for Greater Responsiveness to Future Events. How Should You Approach Strategic Cash?

Company 14

Company Cost of Capital Finance Long-term 14

Harvard Business Review

NOVEMBER 4, 2014

Proponents argue that divestment is a symbolic statement that can discourage fossil fuel consumption by stigmatizing the industry. The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. In this case, divestment would clearly backfire.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

Proponents argue that divestment is a symbolic statement that can discourage fossil fuel consumption by stigmatizing the industry. The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. In this case, divestment would clearly backfire.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

JULY 25, 2017

Track competitors’ MROI to gauge how your company is performing against others in the industry. While MROI is not usually public information, managers can use published financial statement data to estimate MROI for a competitor. Comparing marketing efficiency with competitors. Holding themselves accountable.

ROI 8

ROI Marketing Marketing Mix Cost of Capital 8

Harvard Business Review

APRIL 23, 2015

“These ideas are more than 30 years old,” managers complain. The basic principles are: If you want to earn above the cost of capital (if you want to create value), you must get a higher return on your efforts than the average competitor. Another example comes from the restaurant industry.

Strategy 8

Strategy Porter Price Cost of Capital 8

Harvard Business Review

OCTOBER 15, 2013

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. Today most if not all industries are impacted by digitization—mobile technology, big data, and the like.

P&L 8

P&L Fixed Assets Charan Delegation 8

Harvard Business Review

FEBRUARY 2, 2012

Today, only 9% of businesses in the world have achieved even a modest level of sustained, profitable growth over the past decade on average (5.5%, earning cost of capital) and that is declining — even though virtually all the businesses aspire to something like this or more.

Competitive Advantage 15

Competitive Advantage Porter Goleman Emotional Intelligence 15

Harvard Business Review

OCTOBER 10, 2017

For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. That’s why good managers put so much focus on measuring and managing return on investment (ROI) as a basic operational practice.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

JUNE 18, 2015

The private equity industry has grown markedly in the last 20 years and we know more than we used to about its effects on the economy. What have been less explored are the specific actions taken by private equity (PE) fund managers. What have been less explored are the specific actions taken by private equity (PE) fund managers.

Discounted Cash Flow 8

Discounted Cash Flow CAPM Company Rate of Return 8

Harvard Business Review

MARCH 31, 2015

While consumers are rightfully worried that their personal information may be compromised, shareholders and companies’ management have a wider set of concerns, including loss of intellectual property, operational disruption, decreased customer trust, tarnished brand, and loss of investor commitment.

Price 8

Price Long-term Short-term Banking 8

Harvard Business Review

OCTOBER 21, 2016

These require sophisticated, sustainability-based management. Yet executives are often reluctant to place sustainability core to their company’s business strategy in the mistaken belief that the costs outweigh the benefits. ” Improving risk management. ” Improving risk management.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

AUGUST 21, 2015

This is one of the key metrics for marketing managers, says Avery. “You have to look at it in context of the industry and its competitive structure and in the context of consumers’ lives.” ” What are some of the common mistakes managers make with price elasticity? How do companies use it?

Price 8

Price Debt to Equity Ratio Marketing Net Present Value 8

Harvard Business Review

NOVEMBER 25, 2013

Only when they began to really analyze their marketing costs did the company realize that it was spending three times the industry benchmark on coupons and 50 percent more on research. And at another — a consumer packaged goods company — a series of strong brands had evolved in separate silos.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

FEBRUARY 7, 2017

Companies deliver superior results when executives manage for long-term value creation and resist pressure from analysts and investors to focus excessively on meeting Wall Street’s quarterly earnings expectations. public market capitalization over this period. This has long seemed intuitively true to us. We calculate that U.S.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

OCTOBER 11, 2013

When the well-known hedge fund manager and short-seller Jeremiah Hughes first put Terranola in the spotlight, issuing ominous warnings about unsold products, a looming patent expiration, and flawed growth projections, the considered judgment of the executive team was to do nothing. “I They even sued one fund manager. Doom and Gloom.

Case Study 8

Case Study Hedge CFO PR 8

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Hence, the customer-selection criteria of sales managers, and call patterns of sales reps, directly impact the first value-creation lever: which projects the firm invests in. But consider the basics.

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

DECEMBER 13, 2017

Investors punish companies with a short-term orientation by applying higher discount rates to them, which increases the cost of capital for those companies. In contrast, companies with a long-term orientation are rewarded with a lower cost of capital, which allows them to afford more innovation—a virtuous cycle.

Short-term 8

Short-term Decentralization Company Trends 8

Harvard Business Review

MAY 25, 2018

Our own consulting industry is the poster child for this phenomenon.) ” Another is, “How will a company like that ever be managed?” The most successful will develop clear joint goals and an entrepreneurially enabled management style that focuses more on outcomes than on control.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

APRIL 2, 2014

Others, most notably money managers and former Fama students Cliff Asness and John Liew in an epic Institutional Investor article , have done a lot recent to clarify how Fama’s ideas and Shiller’s can at least co-exist peacefully. It is used in the more technical end of the financial industry, for example in derivatives valuation.

CAPM 8

CAPM Discount Price Finance 8

Strategy Driven

SEPTEMBER 9, 2011

The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Yet for the small handful of companies that have managed to drive growth consistently – even through tough times – the payoff is great. How do they do it?

Innovation 50

Innovation NPV Business Model Constraint 50

Harvard Business Review

MARCH 1, 2017

This all adds cost, with consumers ultimately bearing the burden. First, because it’s antiquated, a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. Most firms cite opportunities to reduce friction and costs. It begs the question: Why is our financial system so inefficient?

Finance 8

Finance IPO Banking Venture Capitalist 8