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 ROI — net present value , payback, breakeven — and internal rate of return , or IRR.

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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. This is the major limitation of the payback method.

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Volatile, Uncertain, Complex and Ambiguous (VUCA) Business

Coaching Tip

New research from DDI and The Conference Board, titled The Global Leadership Forecast (GLF) 2014 | 2015, Ready-Now Leaders: Meeting Tomorrow’s Business Challenges , examines the relationship between leadership practices and financial performance in this environment and identifies the seven specific leadership best practices most unique to organizations in the top 20 percent of financial performance. . Those in the bottom 20 percent counted only 19 percent of their leaders as women.

The Most Common Mistake People Make In Calculating ROI

Harvard Business Review

Your company is ready to make a big purchase — a fleet of cars, a piece of manufacturing equipment, a new computer system. But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs.

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A Refresher on Cost of Capital

Harvard Business Review

You’ve got an idea for a new product line, a way to revamp your inventory management system, or a piece of equipment that will make your work easier. You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital.

Walmart Broadens ROI for Green Power

Harvard Business Review

I've followed the greening of the retail giant fairly closely for years, so I wasn't expecting a lot of new information from Bedore, Walmart's Senior Director of Business Strategy and Sustainability. But amidst a seemingly scripted set of responses on Walmart's supply chain and operational greening efforts, the discussion took an interesting turn. When addressing the company's aspirational goal of using 100% renewable energy, Bedore said two noteworthy things.

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Venture Capitalists Get Paid Well to Lose Money

Harvard Business Review

2013 had all the signs of being a comeback year for venture capital. The industry realized its highest returns since the Internet boom. The industry’s persistent inability to outperform public equities is a disappointment to investors, and a very real threat to the sustainability of the VC industry as we know it. The ongoing poor performance of venture capital firms should be an obvious problem for institutional investors. What is the optimum level of VC commit?

The Case for Stock Buybacks

Harvard Business Review

If paying excessive CEO salaries is the most maligned use of corporate funds, stock buybacks may well take second place. It boosts prices in the short run, but the real way to boost the value of a corporation is to invest in the future, and they are not doing that.” ” The UK Government is launching an inquiry into buybacks , due to concerns that they “may be crowding out the allocation of surplus capital to productive investment.”

3 Emerging Market Risks Companies Should Watch for in 2018

Harvard Business Review

We identified three emerging market risks that are top multinational leaders should be paying more attention to this year: the election of populists in Brazil and Mexico increasing the cost of doing business. If these events occur, they would severely disrupt multinationals’ market strategies, supply chains, and exchange-rate assumptions. real GDP growth rate for the region, but there is more business risk than many expect. Navy for the better part of a century.

Americans Haven’t Saved Enough for Retirement. What Are We Going to Do About It?

Harvard Business Review

One of the first big issues he highlighted was retirement : “Many [individuals across the world] don’t have the financial capacity, the resources, or the tools to save effectively; those who are invested are too often over-allocated to cash. For millions, the prospect of a secure retirement is slipping further and further away — especially among workers with less education, whose job security is increasingly tenuous. of every paycheck to the GRA until they retire.

Should Companies Retain "Strategic" Cash?

Harvard Business Review

To enhance financial flexibility, companies have been retaining unprecedented amounts of cash on their balance sheets, calling it "strategic" cash to distinguish it from the "operating" cash that is needed to run the business. This raises the question of whether retaining strategic cash makes economic sense and should be viewed as a legitimate corporate finance tool in today's environment. Much of the strategic cash is typically held outside the United States.

Can Impact Investing Avoid the Failures of Microfinance?

Harvard Business Review

The impact investment industry is growing rapidly, a fact that many of us in the field celebrate. Morgan projected up to $1T in investment would be deployed this decade — which would make impact investing twice the size of official development aid to the world’s less develop countries (as defined by the United Nations) , presuming historic levels of aid stayed constant since 2010. Erik Dreyer/Getty Images.

How the Next Generation Is Approaching Society’s Biggest Problems

Harvard Business Review

First, private citizens, particularly younger people, are choosing different types of career paths. Second, changes in technology have dramatically lowered the cost of experimentation and create unprecedented transparency into problems, solutions, and results. Take the story of Salman Khan and the eponymous Khan Academy. The same is true of everyone on his team. Distributing content over the Internet is also inexpensive, while reaching a potential audience of billions.

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The Comprehensive Business Case for Sustainability

Harvard Business Review

Today’s executives are dealing with a complex and unprecedented brew of social, environmental, market, and technological trends. Hoping to alleviate their concerns, this article also provides concrete examples of how sustainability benefits the bottom line. Traditional business models aim to create value for shareholders, often at the expense of other stakeholders. Climate change, water scarcity, and poor labor conditions in much of the world increase the risk.