Cost of Capital, ROIC and Strategy

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Cost of Capital

ROIC

Strategy

CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

APRIL 16, 2015

Unless your company’s return on capital exceeds its cost of capital, no amount of revenue growth can create value. For the many firms whose cost of capital and return on capital are roughly equal, in fact, the only path to value creation is to increase return on capital.

CEO

CEO ROIC Cost of Capital Merton

Untangling Skill and Luck

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. As important, the rate of reversion to the mean is a function of the relative contribution of luck.

Skills

Skills ROIC Sports Cost of Capital

Leadership Digital

CEOs Don’t Care Enough About Capital Allocation

Untangling Skill and Luck

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