Harvard Business Review

APRIL 18, 2016

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. A Refresher on Net Present Value. For that reason, net present value is often the preferred method. Further Reading.

Payback Period 8

Payback Period Net Present Value ROI Rate of Return 8

Harvard Business Review

DECEMBER 23, 2013

Reviewing marketing investments and brand performance of multinational companies across regions is a good place to start since that data often yields a useful set of measurements of the impact of “brand leakage” (ie. how much base sales is lost and at what rate). customer surveys). Marketing analytics is far from a monolithic approach.

Marketing 10

Marketing NPV Short-term Net Present Value 10

Harvard Business Review

MARCH 10, 2011

To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. It's the opening paragraph of a Harvard Business Review article called "What's Your Real Cost of Capital?" That paragraph isn't my own writing. by James J. McNulty, Tony D. Yeh, William S.

CAPM 14

CAPM Cost Discounted Cash Flow Cost of Capital 14

Harvard Business Review

SEPTEMBER 13, 2017

We found that sustainable and deforestation-free practices created significant financial benefits for all players in the industry’s value chain. Specifically, our analysis found that the net benefits to ranchers ranged from $18 million to $34 million (12% to 23% of revenues) in net present value projected over 10 years.

Supply Chain 8

Supply Chain Net Present Value Retail Cost of Capital 8

Harvard Business Review

MAY 4, 2017

As long as there are strong increasing returns to create , it’s possible that the net present value of my profit harvesting is indefinitely larger if deferred to the future. The Refresher: Net Present Value. Today, AWS is a much more valuable business for the company’s long-termism. So is Facebook.

Collison 9

Collison Net Present Value Company Short-term 9

Harvard Business Review

FEBRUARY 7, 2011

A review of the recent literature in economics and political science shows that many have tracked changes in economic growth rates after transitions to democracy, yet there is absolutely no agreement on the key empirics. The highest estimate that we could find from recent, peer-reviewed studies was a 1.08

NPV 13

NPV Short-term Discount Politics 13

Harvard Business Review

JULY 15, 2014

At its core, CLV is the present value of all future streams of profits that an individual customer generates over the life of his or her business with the firm. The discount rate in the CLV equation calculates the present value of that future revenue and is tied to the current cost of money. x number of years).

Discount 10

Discount Direct Marketing Present Value Customer Loyalty 10

Harvard Business Review

JUNE 8, 2018

Business students have traditionally considered net present value, payback period, and hurdle rates as necessary tools to determine which project to select. Some of these ideas contradict traditional financial thinking whereas others seem highly controversial or pessimistic.

Report 8

Report GAAP Net Present Value CFO 8

Harvard Business Review

MARCH 31, 2017

But having a grasp of terms like EBITDA and net present value are important no matter where you sit on the org chart. The Refresher: Net Present Value. Review your organization’s quarterly reports to help you understand the specific things it does to be profitable. How can you boost your financial acumen?

Finance 8

Finance Skills EBITDA Net Present Value 8

Harvard Business Review

NOVEMBER 9, 2012

In an uncertain and volatile world, risk management — a previously unsexy subject for many managers who created annual updates or reviews of their company's risk management plans — is now a front-burner issue for many. CEOs and CFOs should consider rethinking who is managing risk in their global supply chains.

Supply Chain 8

Supply Chain Chief Procurement Officer Risk Management Management 8

Harvard Business Review

JUNE 28, 2016

But the advantage to the traditional path in the early years is very much offset by the impressive EtA cash flows that occur once the carry starts getting paid and even more so upon exit (which we’ve assumed in year 10 in this example).

Consultative 8

Consultative CAGR EBITDA CEO 8

Harvard Business Review

NOVEMBER 25, 2013

CFOs are more interested in capital investment estimates, net present values, and a clear outline of the trade-offs of any investment. It’s the CMO’s job to make sure that metrics reflecting the health and value of the customer base –net present value, lifetime value, return on loyalty, cost per acquisition – get on the balance sheet.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

SEPTEMBER 10, 2012

When forced to present familiar metrics for truly out-of-the-box "beginning" ideas, work teams develop what our friend Jay Paap calls "Imaginary Numbers."

Process 15

Process Innovation Stage-Gate Net Present Value 15

Harvard Business Review

OCTOBER 16, 2013

Most companies – including the movie studios in Hollywood – over-rely on basic tools like discounted cash flow and net present value. But it is possible to significantly improve your odds by understanding which decision-support tools work best for which decisions.

Discounted Cash Flow 8

Discounted Cash Flow Net Present Value Comparison Tools 8

Harvard Business Review

NOVEMBER 7, 2011

And using net-present-value estimates for "beginning" ideas is nuts. Because they know they would get laughed out of the room if they were to advocate for a hunch. Skating to where the puck is now is not being customer-driven. It's being customer-reactive. And yet we continue to do the same thing and expect different results.

CEO 12

CEO Net Present Value Banking Metrics 12

Harvard Business Review

DECEMBER 22, 2010

Consider, for example, that the estimated net present value of obligations under the Social Security system is approximately $8 trillion. But closer inspection of government data reveals that these figures grossly understate both the current deficit and level of debt.

GDP 15

GDP Net Present Value Crisis Cost 15

Harvard Business Review

JULY 9, 2012

The net present value and strategic fit of a given relationship or initial introduction in one's Lucky Network might be foggy at best, but unintended benefits often manifest for those who embrace relationships with openness.

Net Present Value 15

Net Present Value Entrepreneur Strategic Fit Open-book 15

Harvard Business Review

JANUARY 11, 2012

Note what isn't part of the decision: an idea's net present value or return on investment. Teams should certainly develop their best guesses about how the idea will make money, but leaders shouldn't place too much emphasis on financial metrics for early stage ideas.

Company 15

Company Net Present Value How To Proposal 15

Harvard Business Review

DECEMBER 1, 2011

A firm's long-term value should correspond to the present value of future expected cash flows. This conclusion draws on two arguments, each of which needs to explained briefly. The short-term price of a stock can differ from that implied by the firm's long-term valuation.

Short-term 14

Short-term Hostile Takeover Long-term Management 14

Harvard Business Review

FEBRUARY 24, 2014

While on the surface, the dirty business of fossil fuels is nothing like Silicon Valley, many in the oil business have moved beyond the standard net present value (NPV) model for assessing the merit of investments. What if I suggested that the best place to look for answers could be the shale oil fields of North Dakota?

NPV 8

NPV Net Present Value Industry Video 8

Harvard Business Review

DECEMBER 2, 2010

The higher level of uncertainty associated with H2 and H3 necessitates an updated valuation methodology that takes into account more than the net present value (NPV) of the target. We call this the Opportunity Value (OV) of an asset. This is where Opportunity Engineering comes into play.

NPV 14

NPV Net Present Value Price Engineering 14

Harvard Business Review

JULY 1, 2016

For instance, he states that “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” .” He then enumerates the ways in which the firm’s policies will support the objective.

Short-term 9

Short-term Long-term Objective Incentives 9

Harvard Business Review

MAY 29, 2017

And finally, writing a values statement is used as the start of an ongoing, transformational journey, not the conclusion of one. When these three conditions aren’t present, values can get hijacked and misused. Without accountability, values become a weapon to punish. Here’s how it happens: 1.

Bottom-up 9

Bottom-up Competitive Advantage Organization Workshop 9

Harvard Business Review

MARCH 29, 2018

Despite a one-year payback period and a highly positive net present value (NPV) from this investment, the department will often reject the attractive opportunity. Consider the opportunity to raise spending in Year 1 by $100,000 to acquire technology that would decrease spending each year thereafter by $100,000.

Budgeting 8

Budgeting System Innovation Payback Period 8

Harvard Business Review

FEBRUARY 24, 2011

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

Letter P&L Net Present Value Insurance 15

Harvard Business Review

MARCH 4, 2013

In some versions of the experiment, a price tag was left on and catalogers were informed of the present's value, to ensure that the employees didn't overestimate it.) Another group was given a gift-wrapped water bottle that was worth around seven Euros. (In

Motivation 8

Motivation Library Short-term Loyalty 8

Harvard Business Review

MARCH 6, 2013

There are three main ways of explaining stock prices: The first is basic economics — a share of stock is worth the present value of the future cash flows associated with it. Put another way, a company's stock-market value is a function of how much money investors think it will make in the coming months and years.

Price 8

Price Bond Marketing Present Value 8

Harvard Business Review

APRIL 9, 2015

You can use one or more of four ROI calculation methods: payback, net present value , internal rate of return, and profitability index. The finance people determine hurdle rates by looking at the company’s cost of capital, at the risk involved in a given project, and at the opportunity cost of forgoing other investments.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

MARCH 23, 2015

Do you think they’re going to do a net present value (NPV) analysis that shows they don’t need that computer? Joe Knight. Add to Cart. Everyone always wants new equipment — new computers or other hot technologies. Of course not.

Finance 8

Finance NPV CFO ROI 8

Harvard Business Review

NOVEMBER 19, 2015

This can be quantified by analyzing the extent to which the share prices of S&P 500 firms are driven by a firm’s present value of future growth options (PVGO) rather than cash flow from current operations. Our research shows that U.S.

Company 8

Company Succession Maturity Long-term 8

Harvard Business Review

AUGUST 3, 2018

Based on disclosures following this blueprint, a smart analyst can project a firm’s future revenues, estimate outlays required to sustain the firm’s business model, and calculate the present value of future cash flows. The analyst can then top that valuation with the option values of moonshot projects.

Report 8

Report GAAP Company Proposal 8

Harvard Business Review

DECEMBER 11, 2013

These were engineers and network planners; surely, they understood economics and net present value analysis. Still frustrated, I walked the corridors of South Africa Telkom and ran into the old guard. I told them my story. They agreed that the Mandela proposal was nonsense.

Net Present Value 8

Net Present Value Politics Analysis Telecommunications 8

Harvard Business Review

DECEMBER 2, 2013

Managers have embraced this kind of thinking not because they have taken a “be nice” pill, but rather because they see that truly effective community programs reduce community risk, and thereby increase the net present value of their assets in developing and fragile states.

Trends 8

Trends Development Net Present Value NGO 8

Harvard Business Review

OCTOBER 3, 2011

The research in this area points to three salient points: First, the value of the business is the present value of future cash flows. The skills and effort that catapulted them to the top spot typically do not prepare them to deal with markets and investors. An enlightened CEO learns how the stock market sets prices.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

OCTOBER 15, 2012

As innovators engage with the market through the MVP, they learn valuable information to help them refine the product-market fit and better understand and further build for the value proposition. Net Present Value ). This iterative approach is consistent with "real options" (vs.

Innovation 8

Innovation Execution Net Present Value Open-book 8

Harvard Business Review

SEPTEMBER 27, 2012

To prioritize projects, for instance, the ALL team could have forecast future cash flows for every potential investment and ranked all proposals on the basis of their net present value. But like most complicated models, that approach would have had many disadvantages relative to simple rules.

Strategy 8

Strategy Proposal Guidelines Net Present Value 8

Harvard Business Review

JUNE 18, 2015

For instance, despite the prominent role that discounted cash flow valuation methods play in academic finance courses, few PE investors use discounted cash flow or net present value techniques to evaluate investments. Rather, they rely on internal rates of return and multiples of invested capital.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8