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A Refresher on Cost of Capital

Harvard Business Review

You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital. To learn more about this commonly used business term, I spoke with Joe Knight, author of the HBR TOOLS: Return on Investment and co-founder and owner of www.business-literacy.com. Joe Knight.

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Should Companies Retain "Strategic" Cash?

Harvard Business Review

Politicians have claimed that retaining cash balances is hurting the global economy—even characterizing the practice as unpatriotic —and many investors have argued that excess cash rightfully should be returned to shareholders through dividend payments or share repurchases. Arguments for Strategic Cash. Facilitate Investments.

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What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

In a survey of 79 PE firms managing more than $750 billion in capital, we provide granular information on PE managers’ practices and how firms’ strategies relate to the characteristics of their founders. In particular, we are interested in how many of their responses correlate with what academic finance knows and what it teaches.

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The Most Common Mistake People Make In Calculating ROI

Harvard Business Review

Sure, you may know this already, but people who haven’t studied finance often find this statement confusing. HBR TOOLS: Return on Investment. Finance & Accounting Tool. It’s where your company’s finance department will ask the toughest questions and scrutinize your estimates and assumptions most carefully.

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