article thumbnail

Understanding Financial Leverage

Harvard Business Review

The most intimate relationship most of us have with leverage is our home mortgage. However, there are two conditions necessary for financial leverage to actually become power. The second is that the asset underlying the leverage holds its value. What if a competitor slashes membership prices by 25%?

article thumbnail

The Type of Socially Responsible Investments That Make Firms More Profitable

Harvard Business Review

The results are very consistent: firms making investments on material ESG issues outperform their peers in the future in terms of risk-adjusted stock price performance, sales growth, and profitability margin growth.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

How To Really Measure a Company's Innovation Prowess

Harvard Business Review

Last year , number crunchers at Forbes found that Salesforce.com is the company with the highest "Innovation Premium" baked into its stock price. Financial leverage (assets over equity). The editors of Fast Company say Nike. Operating efficiency (sales over assets).

article thumbnail

I Got My Strategy from Greenpeace

Harvard Business Review

But there our story deviates from the norm because our turnaround wasn't based on cost control, financial leverage, or manufacturing efficiencies. We put our money in because we saw an opportunity to turn a struggling company around and secure a high ROI. We did that. All this translates into hard cash.

article thumbnail

How To Really Measure a Company's Innovation Prowess

Harvard Business Review

Last year , number crunchers at Forbes found that Salesforce.com is the company with the highest "Innovation Premium" baked into its stock price. Financial leverage (assets over equity). The editors of Fast Company say Nike. Operating efficiency (sales over assets).