Musings on Markets

FEBRUARY 12, 2025

I am in the third week of the corporate finance class that I teach at NYU Stern, and my students have been lulled into a false sense of complacency about what's coming, since I have not used a single metric or number in my class yet. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks!

Hurdle Rate 72

Hurdle Rate Accounting Investments Economics 72

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

Barry Ritholtz

FEBRUARY 9, 2023

Where the DK/GHC really overlap is when a new product has a low hurdle rate. Michael Dell famously sold PCs out of his dorm room; in the early parts of the 20 th century, there were endless new car companies.

Hurdle Rate 111

Hurdle Rate Technology Numbers Marketing 111

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

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

MARCH 5, 2025

It also follows that the investment, financing, and dividend decisions , at most firms, are interconnected, since for any given set of investments, borrowing more money will free up more cash flows to return to shareholders, and for any given financing, investing more back into the business will leave less in returnable cash flows.

Corporate Finance 52

Corporate Finance Investments Finance Hurdle Rate 52

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. Why does the risk-free rate matter? and the reverse will occur, when risk-free rates drop.

Investments 98

Investments Currencies Treasury Hurdle Rate 98

CFO News Room

JANUARY 7, 2023

Check rules of thumb : Investing and corporate finance are full of rules of thumb, many of long standing. Finance but also from a variety of online data services that are affordable and very well done. . Or, do US companies pay far less in taxes than companies incorporated in the rest of the world?

Marketing 130

Marketing Valuation Corporate Finance Financial Analysis 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 5, 2024

I have also developed a practice in the last decade of spending much of January exploring what the data tells us, and does not tell us, about the investing, financing and dividend choices that companies made during the most recent year. Tax rates 4. Financing Flows 5. Insider, CEO & Institutional holdings 2. Debt Details 1.

Valuation 105

Valuation Financial Analysis Analyzing Data Profit and Loss 105

PYMNTS

FEBRUARY 16, 2017

The weakest performers fell below the returns hurdle rate across regions and across segments, the report noted. Overall, the majority of corporate banking divisions in North America experienced shrinking economic profit during that timeframe.

Banking 43

Banking Hurdle Rate Benchmarking Economics 43

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. Of course, but with two caveats.

Valuation 52

Valuation Corporate Finance Finance Investments 52

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. Cap Ex & Net Cap Ex ((including acquisitons) 2. Operating Margin 2.

Valuation 52

Valuation Corporate Finance Financial Analysis Leverage 52

Barry Ritholtz

MAY 9, 2023

I didn’t really know much about the world of finance. So how do you then go from tax and audit practice to finance and investing? Quote, “The world of finance isn’t as complicated as newcomers expect. In order to compete and win in so many things today in finance, you have to be super specialized.

Investments 119

Investments Banking Advertising Numbers 119

Barry Ritholtz

NOVEMBER 8, 2022

His latest book could not be more timely, “The Price of Time: The Real Story of Interest,” it’s all about the history of interest rates, money lending, investing speculation, funded by banks and loans and credit. According to Chancellor, interest is the single most important feature of finance, both ancient and modern.

Valuation 59

Valuation Finance Investments Banking 59

Musings on Markets

FEBRUARY 27, 2023

The second is that borrowing money will increase perceived default risk, and if the company is rated, lower ratings, and that too is true, but borrowing money at a BBB rating, with the tax benefit incorporated, might still yield a lower cost of funding that staying at a AA rating, with no debt in use.

Corporate Finance 52

Corporate Finance Finance Marketing Banking 52

Barry Ritholtz

FEBRUARY 21, 2023

That means a low hurdle rate. RITHOLTZ: Those are two rock star finance CEOs. The finance industry’s record on diversity is not so great. If you think about the fact that we’re client-owned, so we’re delivering as close to at costs as possible. So we do that. BUCKLEY: Yeah. RITHOLTZ: — as always.

Leadership 111

Leadership Investments Profit and Loss Technology 111

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. Since my interests lie in corporate finance and valuation, the statistics that I compute are numbers that I will find useful when doing a corporate financial analysis or valuation of a company.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

Musings on Markets

JANUARY 27, 2021

Finance Both Bitcoin and Ethereum delivered spellbinding returns in 2020, with Bitcoin up more than 300% and Ethereum up 469%. Data Update 4 for 2021: The Hurdle Rate Question. In Bitcoin's favor, it has been able to make it through prior downturns, and not only survive but come back stronger, but the question still remains.

Currencies 52

Currencies Investments Marketing Treasury 52

Musings on Markets

JANUARY 28, 2024

In this post, I look at risk, a central theme in finance and investing, but one that is surprisingly misunderstood and misconstrued. I do believe that, in finance, we have significant advances in understanding what risk, I also think that as a discipline, finance has missed the mark on risk, in three ways. What is risk?

Hurdle Rate 117

Hurdle Rate Concentration Investments Finance 117

Musings on Markets

FEBRUARY 23, 2025

The cost of debt is lower than the cost of equity : If you review my sixth data update on hurdle rates , and go through my cost of capital calculation, there is one inescapable conclusion. Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! Data Update 6 for 2025: From Macro to Micro - The Hurdle Rate Question!

Hurdle Rate 75

Hurdle Rate Marketing Investments IFRS 75

Barry Ritholtz

MAY 21, 2024

SAVI is one of these women in the world of finance who is a powerhouse. She is one of the few people who combine quantitative investing with behavioral finance. They’ve completely accepted me for who I am as the dark, you know, dark art of finance person. So I got a job in finance. They got bought by Bank America.

Finance 59

Finance Marketing Numbers Investments 59

Barry Ritholtz

NOVEMBER 25, 2024

You get a, a BS in computer science from Cornell, a master’s in computational finance from Carnegie Mellon. So you’ve got, you’ve got a modeling hurdle rate that you need to figure out when you’re adding diversifiers. That is what we do when we raise a round of equity financing, right? It was not.

Leverage 59

Leverage Investments Marketing Math 59

Barry Ritholtz

DECEMBER 26, 2023

So, you know, after I, I, so what I did was I was looking around for finance jobs, and obviously you’re not gonna hire, you know, a pre-med bio major, an English writing major. A finance m and a right’s the way that’s how it goes. I had no finance background. I, but I managed to jumped my score, right.

Marketing 64

Marketing Leadership Finance Investments 64

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