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 82

Hurdle Rate Investments Accounting Entertainment 82

Musings on Markets

AUGUST 19, 2024

In the manufacturing-centered twentieth century, it took decades for companies like GE and Ford to scale up, but they also stayed at the top for long periods, before declining over decades. With declining businesses, facing shrinking revenues and margins, it is cash return or dividend policy that moves into the front seat.

Corporate Finance 98

Corporate Finance Valuation Investments Finance 98

Musings on Markets

FEBRUARY 15, 2023

Some of that variation can be attributed to different mixes of businesses in different regions, since unit economics will result in higher gross margins for technology companies and commodity companies, in years when commodity prices are high, and lower gross margins for heavy manufacturing and retail businesses.

Profit and Loss 52

Profit and Loss Investments Hurdle Rate Accounting 52

Musings on Markets

JANUARY 12, 2021

Discount rates in intrinsic valaution have to change to reflect current market conditions, and can be expected to change over time. Investment strategies that create concentrations in manufacturing and captial intensive companies need to be balanced with firms that have more flexible cost structures.

Valuation 52

Valuation Corporate Finance Finance Investments 52

Barry Ritholtz

MAY 21, 2024

Whereas in 1980, 70% of it was manufacturing asset intensive, et cetera. But now we’re back to a more normal hurdle rate. 5% interest rates is not super high. Especially in, in light of the fact that the market itself is not one kind of monolith that’s, that’s always the same. 00:50:03 Not anymore.

Finance 58

Finance Marketing Numbers Investments 58

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 74

Hurdle Rate Currencies Valuation Economics 74