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The Most Common Mistake People Make In Calculating ROI

Harvard Business Review

But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. Analyzing ROI isn’t always as simple as it sounds and there’s one mistake that many managers make: confusing cash and profit. Finance & Accounting Tool. Excerpted from.

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When It Pays to Think Like a Finance Manager

Harvard Business Review

If you want approval for a new project — purchasing new equipment or computer systems, applying for a patent, building a new store — chances are you need your company’s finance department on board. To get the green light, it helps to understand how finance people think. Finance & Accounting Tool.

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A Refresher on Payback Method

Harvard Business Review

There are a variety of ways to calculate a return on investment (ROI) — net present value , internal rate of return , breakeven — but the simplest is payback period. Payback is by far the most common ROI method used to express the return you’re getting on an investment. What is payback period?

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A Refresher on Internal Rate of Return

Harvard Business Review

Any time you propose a capital expenditure, you can be sure senior leaders will want to know what the return on investment (ROI) is. There are a variety of methods you can use to calculate ROInet present value , payback, breakeven — and internal rate of return , or IRR. Further Reading.

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How CMOs Can Get CFOs on Their Side

Harvard Business Review

Marketing is in the midst of an ROI revolution. 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. The opportunity is enormous.

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