Walmart Broadens ROI for Green Power

Harvard Business Review

Second, Bedore spoke about how Walmart thinks about its investments in green power: "There is an ROI calculation on all sustainability investments like on all projects, but.we For example] the longer term payback on solar helps us get to scale down the road.". In short, Walmart has tweaked its ROI requirements for green power initiatives to reflect more of the big picture. When it comes to green projects, this narrowly-defined measure of "payback" is particularly destructive.

A Refresher on Payback Method

Harvard Business

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. I talked with Joe Knight, author of the HBR TOOLS: Return on Investment and cofounder and owner of www.business-literacy.com , to learn more about how to understand and use this particular ROI method. What is payback period? ” The shorter the payback period, the better.

An HBR Refresher on Breakeven Quantity

Harvard Business Review

“It’s one of the more popular ways that managers calculate marketing ROI,” says Avery, pointing out that other common ones include calculating the investment payback period, calculating an internal rate of return, and using net present value analysis. ” The other forms of ROI often require a more complex understanding of financial concepts such as the firm’s cost of capital or the time value of money.