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Rethinking Valuation So You Don't Miss a Good Deal

Harvard Business Review

To do this, we combine two separate frameworks: the first is the Three Horizon strategic model developed by McKinsey. Horizon 1 (H1) represents the current core operations of a company that produce the cash flow needed to sustain operations, to meet investor expectations, and to invest in future growth. Alexander B.

NPV 14
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Will You Be Writing Off Your Investment in Egypt?

Harvard Business Review

With political upheaval roiling the streets of Cairo, the first concern of top management in many multinationals is to get their employees and their families out of Egypt safely. Anyone who has had to make the argument for an investment knows the basic tool involved: a Net Present Value (NPV) calculation.

NPV 12
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Lafley’s P&G Brand Cull and the 80/20 Rule

Harvard Business Review

Declaring he’d cull up to 100 brands — many of which he’d acquired and developed — P&G CEO A.G. “Importantly, this will be a much simpler, much less complex company of leading brands that’s easier to manage and operate.” Should management refine and dig deeper into existing 80/20 KPIs?

Brand 8
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How to Improve Your Finance Skills (Even If You Hate Numbers)

Harvard Business Review

The most important concepts to grasp are “how to measure profitability, EBITDA, operating income, revenue, and operating expenses,” he says. Next time you're deciding about a big investment, NPV can help you make a more informed decision. Related Video. The Refresher: Net Present Value. ” scenarios.

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Reflecting on David Garvin’s Imprint on Management

Harvard Business Review

Garvin was a generalist more than a specialist, perhaps because he came of age at HBS during the 1980s, when the school’s primary focus was the development of skilled general managers. One of the many articles circling back to this topic of late revisited the still-common use of NPV hurdles in investment decisions.)

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Stop Focusing on Profitability and Go for Growth

Harvard Business Review

Next time you're deciding about a big investment, NPV can help you make a more informed decision. In our experience, companies still focus more on cutting costs than on developing and executing new growth strategies. Related Video. The Refresher: Net Present Value. Bain recently completed research on workforce productivity.

ROE 14
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Is Your Business Biased Against Innovation?

Strategy Driven

Net present value [NPV] is a case in point. The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Yet for the small handful of companies that have managed to drive growth consistently – even through tough times – the payoff is great.