Strategy Driven

JULY 13, 2011

Supplementing profits with ROIC and revenue growth is a step in the right direction to ensure that the profits a business earns are actually creating value, not simply over-consuming capital that another company could better deploy. However, profits, ROIC, and revenue growth are backward looking.

ROIC 62

ROIC Balanced Scorecard Metrics McKinsey 62

Harvard Business Review

APRIL 16, 2015

The results can be impressive: if your firm’s return on invested capital is 8% and you have an 8% cost of capital, a 1% improvement in ROIC will increase firm value by 19%. There are just two ways to increase ROIC: improve operating profit (by increasing revenues or cutting costs) or invest capital more wisely.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

DECEMBER 15, 2015

In the past, sales reps sold to IT system administrators, but now they were conversing more with CFOs and other executives, which better positioned Alphatech to expand at accounts where it did land deals. Financing needs are driven by the cash on hand and the working capital required to conduct and grow the business.

Strategy 8

Strategy Team Discount ROIC 8