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 9

EPS Metrics Depreciation Short-term 9

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. Working capital requirements are typically built into an Excel model you’ll use to calculate ROI , so you don’t need to worry about them.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

FEBRUARY 7, 2017

These indicators and hypotheses were: Investment: The ratio of capex to depreciation. ” Economic profit represents a company’s profit after subtracting a charge for the capital that the firm has invested (working capital, fixed assets, goodwill). In this case its capital charge is $800 times 8%, or $64.

Long-term 8

Long-term EPS Short-term Management 8