Harvard Business Review

APRIL 5, 2017

For instance, McKinsey considered a smaller ratio of capital expenditure to depreciation to indicate short-term thinking, because it’s assumed that short-term companies will invest less, and less consistently, than other companies. As I said earlier, measuring a company’s short-term orientation is incredibly tricky.

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

MAY 4, 2012

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. FD) constraints.

CFO 11

CFO Metrics Price Depreciation 11

Harvard Business Review

APRIL 9, 2015

Some of those costs and expenses aren’t cash-based, either. Income statements almost always include an allowance for depreciation of capital assets. Cash transactions, meanwhile, show up on the cash flow statement. Companies may have more than one hurdle rate depending on the risk involved in proposed investments.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

OCTOBER 21, 2016

McKinsey reports that the value at stake from sustainability concerns can be as a high as 70% of earnings before interest, taxes, depreciation, and amortization. Climate change, water scarcity, and poor labor conditions in much of the world increase the risk.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

FEBRUARY 7, 2017

These indicators and hypotheses were: Investment: The ratio of capex to depreciation. 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.

Long-term 8

Long-term EPS Short-term Management 8