CFO News Room

JANUARY 18, 2023

In my last post, I noted the decline in costs of capital for firms over time, noting that the median cost of capital at the start of 2022 is only 6.33%, across global firms, and argued that companies that demand double-digit hurdle rates risk being shut out of investments.

Marketing 130

Marketing Hurdle Rate Investments Accounting 130

Musings on Markets

FEBRUARY 27, 2022

In my last post, I noted the decline in costs of capital for firms over time, noting that the median cost of capital at the start of 2022 is only 6.33%, across global firms, and argued that companies that demand double-digit hurdle rates risk being shut out of investments.

Hurdle Rate 98

Hurdle Rate Investments Accounting Entertainment 98

Musings on Markets

JANUARY 12, 2021

Corporate Finance : Corporate finance is the development of the first financial principles that govern how to run a business. It is that mission that makes corporate finance the ultimate big picture class, one that everyone (entrepreneurs, investors, analysts, business observers) should take.

Valuation 52

Valuation Corporate Finance Finance Investments 52

PYMNTS

FEBRUARY 16, 2017

. “ Global Corporate Banking 2016: The Next-Generation Corporate Bank ” found that less than a third of corporate banking divisions across North America and Asia, and less than half in Europe, experienced “positive and growing economic profit” between 2013 and 2015.

Banking 43

Banking Hurdle Rate Benchmarking Economics 43

Musings on Markets

MARCH 8, 2023

This is the last of my data update posts for 2023, and in this one, I will focus on dividends and buybacks, perhaps the most most misunderstood and misplayed element of corporate finance. Viewed in that context, dividends as just as integral to a business, as the investing and financing decisions.

Hurdle Rate 102

Hurdle Rate Corporate Finance Investments Finance 102

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Hurdle Rate 80

Hurdle Rate Profit and Loss Accounting Investments 80

CFO News Room

JANUARY 7, 2023

Check rules of thumb : Investing and corporate finance are full of rules of thumb, many of long standing. In the three posts that follow, I will look at the shifts in corporate hurdle rates (in post 6), debt loads and worries (in post 7) and dividends/cash returned in post 8.

Marketing 130

Marketing Valuation Corporate Finance Financial Analysis 130

Musings on Markets

AUGUST 15, 2023

After the rating downgrade, my mailbox was inundated with questions of what this action meant for investing, in general, and for corporate finance and valuation practice, in particular, and this post is my attempt to answer them all with one post. Why does the risk-free rate matter? What is a risk free investment?

Investments 98

Investments Currencies Treasury Hurdle Rate 98

Musings on Markets

JANUARY 6, 2023

Check rules of thumb : Investing and corporate finance are full of rules of thumb, many of long standing. The second is that in my line of work, which is corporate finance and valuation, the numbers I need lie in micro or company-level data, not in the macro space.

Valuation 52

Valuation Corporate Finance Financial Analysis Leverage 52

Musings on Markets

FEBRUARY 27, 2023

If you have taken a corporate finance class sometime in your past life are probably wondering how this approach reconciles with the Miller-Modigliani theorem, a key component of most corporate finance classes, which posits that there is no optimal debt ratio, and that the debt mix does not affect the value of a business.

Corporate Finance 52

Corporate Finance Finance Marketing Banking 52

Musings on Markets

JANUARY 9, 2021

The first is that I do not have a macro focus, and my interests in macro variables occur only in the context of corporate finance or valuation issues. If you use it at their jobs as corporate finance or equity analysts, I am glad to take some of that burden off you, and I hope that you find more enjoyable uses for the time you save.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

Barry Ritholtz

NOVEMBER 8, 2022

I went into what’s called corporate finance, what people would see now as sort of M&A department. CHANCELLOR: Well, I was actually in a sort of subgroup there, which was called corporate strategy. But I didn’t last very long there because I thought I didn’t like corporate finance.

Valuation 59

Valuation Finance Investments Banking 59

Musings on Markets

JANUARY 28, 2024

In particular, there are wide variations in how risk is measured, and once measured, across companies and countries, and those variations can lead to differences in expected returns and hurdle rates, central to both corporate finance and investing judgments. What's coming?

Hurdle Rate 117

Hurdle Rate Concentration Investments Finance 117

Musings on Markets

JANUARY 5, 2024

In my corporate finance class, I describe all decisions that companies make as falling into one of three buckets – investing decisions, financing decision and dividend decisions. Tax rates 4. Financing Flows 5. Insider, CEO & Institutional holdings 2. Aggregate operating numbers 3. Beta & Risk 1.

Valuation 105

Valuation Financial Analysis Analyzing Data Profit and Loss 105

Musings on Markets

JULY 24, 2024

Country Risk in Business Most corporate finance classes and textbooks leave students with the proposition that the right hurdle rate to use in assessing business investments is the cost of capital, but create a host of confusion about what exactly that cost of capital measures.

Hurdle Rate 75

Hurdle Rate Currencies Valuation Economics 75