Harvard Business Review

AUGUST 27, 2015

Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. Consider what’s happening among corporations.

ROIC 8

ROIC McKinsey GDP Company 8

Harvard Business Review

NOVEMBER 20, 2013

Of 1,500 multi-business companies examined each year over the course of two decades, only a minority actively shifted a substantial share of their resources to their most high potential growth businesses. How much reallocation is needed varies, of course. Managers appear to be most at risk of doing too little, not too much.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Harvard Business Review

JUNE 27, 2012

Of course, the 'great disasters' of the past two decades were part of this list, such as Vivendi, General Motors, and AOL/Time Warner. real revenue and profit growth and earning their cost of capital has steadily declined. Only 9% of companies achieved even a modest level of sustained and profitable growth.

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

JUNE 18, 2015

For instance, despite the prominent role that discounted cash flow valuation methods play in academic finance courses, few PE investors use discounted cash flow or net present value techniques to evaluate investments. Rather, they rely on internal rates of return and multiples of invested capital.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

NOVEMBER 25, 2013

CMOs do have plenty of data, of course, but it’s often not the data that the CFO is looking for. CMOs must demonstrate and track marketing’s impact by focusing on key performance indicators (KPIs) that are important for shareholder value such as strong cash flow, cost of capital, return on capital, and operating margin.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

OCTOBER 11, 2013

But of course Hughes’s presentation was a tipping point. With the company’s share price sinking and its cost of capital rising, those deals might have to be put on hold. “Everyone knows that a short-seller is just trying to make money for himself by driving the stock down,” Henry insisted. This will blow over.” A week later A.J.

Case Study 8

Case Study CFO Hedge PR 8

Harvard Business Review

FEBRUARY 7, 2017

The capital charge equals the amount of invested capital times the opportunity cost of capital — that is, the return that shareholders expect to earn from investing in companies with similar risk. In this case its capital charge is $800 times 8%, or $64.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

MAY 25, 2018

Of course, we can already hear the objections coming from the grizzled veterans of traditional M&A. Today’s low cost of capital creates a powerful financial incentive to put money to work by investing in a portfolio of ideas and capabilities. One will certainly be, “Been there, done that, doesn’t work.”

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Harvard Business Review

NOVEMBER 7, 2012

You start by using analysts' reports and other sources to gauge the consensus expectations for value drivers — sales growth, operating profit margins, cost of capital and other factors that determine cash flows.

Price 8

Price Analysis Cost of Capital Disruptive Innovation 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. Net present value [NPV] is a case in point. Discovery-Driven Growth : A Breakthrough Process to Reduce Risk and Seize Opportunity by Rita McGrath. It drives me crazy and is very shortsighted.

Innovation 50

Innovation NPV Business Model Constraint 50

Harvard Business Review

MARCH 1, 2017

Blockchain Capital, one of the industry’s largest investors, recently announced that it would be raising money for its new fund by issuing tokens by ICO, a first for the industry. And, of course, companies such as Goldman Sachs, NASDAQ, Inc., But the genie has been unleashed from the bottle.

Finance 8

Finance IPO Banking Venture Capitalist 8