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A Refresher on Cost of Capital

Harvard Business Review

You’ve got an idea for a new product line, a way to revamp your inventory management system, or a piece of equipment that will make your work easier. You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital. What is the cost of capital?

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The Rise of FinTech in Supply Chains

Harvard Business Review

The use of FinTechs allows suppliers to access funding at the multinationals firm’s lower cost of capital.). Many FinTechs function as cloud-based software platforms and can enable “procure-to-pay” systems that incorporate both purchasing management and accounts payable functionality.

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CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

” A quarter century later, not much seems to have changed: fewer than five out of the 100 CEOs on HBR’s 2014 list of best-performing CEOs even mention “return on capital” on their official biography — and none of those five lead companies listed in the Dow Jones Industrial Average (DJIA) or in the EuroStoxx50.

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What’s Driving Superstar Companies, Industries, and Cities

Harvard Business Review

To analyze the superstar dynamics of firms, our metric was economic profit, a measure of a firm’s profit above and beyond opportunity cost. (To To do this, we take the firm’s returns, deduct the cost of capital, and multiply by the firm’s total invested capital.)

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The Most Common Mistake People Make In Calculating ROI

Harvard Business Review

But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. Analyzing ROI isn’t always as simple as it sounds and there’s one mistake that many managers make: confusing cash and profit. Finance & Accounting Tool. Excerpted from.

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Desperately Seeking Simplicity

Harvard Business Review

An example was a discussion session of tired-looking European finance ministers, defensive and elusive about the speed of acting on the Euro crisis. Rather, their biggest barrier by far (about 85% of the time) relates to the internal complexity of their organizations and the management of their energy against that.

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4 Ways Leaders Can Get More from Their Company’s Innovation Efforts

Harvard Business Review

One reason for the paltry performance is that while other business areas, like sales or finance, are considered to be core functions, innovation is often considered to be something that’s “nice to have” rather than essential. Here are four things leaders can do. Don’t Get Trapped in Your P&L.