Remove Discounted Cash Flow Remove GAAP Remove Innovation Remove Payback Period

Why We Need to Update Financial Reporting for the Digital Era

Harvard Business

Business students have traditionally considered net present value, payback period, and hurdle rates as necessary tools to determine which project to select. However, many investors seem to have concluded that the most successful companies with tens of billions of dollars of valuation today could never have justified their valuation at the start of their operation based on discounted cash flow. Analysts increasingly rely on non-GAAP metrics.

GAAP 35