Remove Finance Remove Net Present Value Remove Planning Remove Present Value
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Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

Business students have traditionally considered net present value, payback period, and hurdle rates as necessary tools to determine which project to select. This notion, that risk is a desirable feature, can seem like sacrilege to anyone who’s taken an introductory finance course.

Report 8
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How CMOs Can Get CFOs on Their Side

Harvard Business Review

This lack of an analytical approach has traditionally formed a barrier between marketing and finance. CFOs are more interested in capital investment estimates, net present values, and a clear outline of the trade-offs of any investment. They’re going to make ads and do whatever it is they do. Ask for the CFO’s help.

CFO 8
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Still Many Ways to Skin a Capital Cost

Harvard Business Review

To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. That's the finding of a new survey on how financial professionals determine their cost of capital, presented in a separate post on HBR.org today.

CAPM 14
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Warren Buffett's 2010 Shareholder Letter: What to Expect

Harvard Business Review

But why compare apples (book value) to oranges (share price and dividends)? Buffett explains that book value is the best proxy for "intrinsic value," the net present value of all estimated future cash flows. Consider that since 1965, Berkshire's book value grew 434,057% and the S&P index grew only 5,430%.

Letter 15
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Stop Focusing on Profitability and Go for Growth

Harvard Business Review

Today, the average cost of equity capital sits at close to half that: just 8% for the roughly 1600 companies comprising the Value Line Index. So, in real terms, debt financing is essentially free. In these circumstances, strategies that generate faster growth create more value for most companies than those that improve profit margins.

ROE 15