1173 Posts Found

In concluding that only systematic risk matters, finance theory assumes that frictions in capital markets are negligible. The absence of frictions implies that all market participants become as costlessly and equally informed as everyone else — that is, no individual is more informed than others or, to use a technical term, there is no information asymmetry. This assumption, combined with several other assumptions, implies … [ Read more ]

Content: Quotation | Authors: David Phillips, Philip Wright | Source: European Business Forum (EBF) | Subjects: Economics, Finance

Cost performance may be a useful measure for companies that want to trim spending as effectively as possible.

Content: Article | Source: CFO Publishing | Subject: Finance

In today’s economic climate, high-performance businesses will increasingly set themselves apart by their ability to quickly make smart decisions. Accenture believes that rolling forecasting is not the solution for many companies, and has created a framework for a more pragmatic alternative—event-driven dynamic planning.

Content: Article | Authors: Brian McCarthy, Sarah Batchelor | Source: Accenture | Subjects: Finance, Management

Fixed costs turn growth into profit. But they can also turn declines into big losses. Variabilization—transforming your fixed costs into variable ones—offers an attractive alternative. A variabilized cost structure is responsive, adapting rapidly to both increases and decreases in demand. Many companies are doing more than variabilize their own costs, they are developing and offering “variabilization solutions” to their customers. This trend suggests that the … [ Read more ]

Content: Article | Author: Nicolas Kachaner | Source: Boston Consulting Group (BCG) | Subjects: Finance, Management, Operations, Strategy

While option-pricing models are a superior valuation tool – the purpose to which the theory is generally put – real options can provide a systematic framework that will also serve as a strategic tool, and that it is in this strategic application that the real power of real options lies.

It is just such a framework that this article seeks to provide. We begin by … [ Read more ]

Content: Article | Authors: Keith Leslie, Max P. Michaels | Source: McKinsey Quarterly | Subject: Finance

Sometimes costs don’t need to be cut so much as captured, quantified, and reconsidered.

Content: Article | Author: Yasmin Ghahremani | Source: CFO Publishing | Subject: Finance

Much has been written about famed U.S. investor and Berkshire Hathaway CEO Warren Buffett’s investment style and successes. Preeminent among these writings are the oft-cited Berkshire Hathaway shareholder letters, written by the “Oracle of Omaha” himself. These informative letters have been the basis for a multitude of books. But even with an abundance of available information on “how to invest like Warren Buffett,” it is … [ Read more ]

Content: Article | Author: Steven R. Ferraro | Source: Graziadio Business Report | Subject: Finance

There is no accepted standard for appraising the worth of nonphysical assets like brands, human capital, and managerial expertise. Yet these are the essence of 21st-century business.

Content: Article | Author: Denise Caruso | Source: strategy+business | Subjects: Accounting, Finance, Management

More companies are using game theory to aid decision-making. How well does it work in the real world?

Content: Article | Author: Alan Rappeport | Source: CFO Publishing | Subject: Finance

Executives, board members, the press, and investors regularly look at total returns to shareholders (TRS) as an important metric of value creation. Yet TRS, like any performance metric, is instructive only when users understand its components. Breaking the metric into four fundamental parts offers a better view.

Content: Article | Authors: Ankur Agrawal, Bas Deelder, Marc H. Goedhart | Source: McKinsey Quarterly | Subject: Finance

New research from Arvind Krishnamurthy argues that the rapid adoption of financial innovations—in this case, subprime mortgage-backed securities—set the stage for crisis. His report with coauthor Ricardo J. Caballero found that when popular new financial instruments behave unexpectedly, investors flee the market. The liquidity supply tightens, making it hard for market participants to get the capital they need.

Content: Article | Authors: Arvind Krishnamurthy, Ricardo J. Caballero | Source: Kellogg Insight | Subjects: Economics, Finance

You know what the efficient market hypothesis is, don’t you? It’s a theory that grew out of the University of Chicago’s finance department, and long held sway in academic circles, that the stock market can’t be beaten on any consistent basis because all available information is already built into stock prices. The stock market, in other words, is rational.

In the last decade, the efficient market … [ Read more ]

Content: Article | Author: Joe Nocera | Source: The New York Times | Subject: Finance

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Many companies are concerned about their ability to generate the funds needed for growth. But there is one potentially powerful source of cash that is often overlooked: working capital. By fundamentally rethinking and streamlining key processes across the value chain, companies can achieve greater reductions in working capital—as much as 30 to 40 percent—and cost savings of 5 to 10 percent. This increase in working … [ Read more ]

Content: Article | Authors: Alexander Roos, Martin Wortler, Patrick Buchmann | Source: Boston Consulting Group (BCG) | Subject: Finance

Why return on capital could be the metric that best helps companies achieve higher returns.

Content: Article | Author: Vincent Ryan | Source: CFO Publishing | Subject: Finance

Stocks, we have been told again and again through the years, are the best long-term investment. Prices go up and they go down, but give stocks enough time and they deliver returns that trounce those of bonds, real estate, commodities or any other asset class.

Ha! you say. Have you checked your 401(k) balance lately? So can stocks possibly still be the best long-run investment? Somewhat … [ Read more ]

Content: Article | Author: Justin Fox | Source: TIME | Subject: Finance

Pricing software can spot pointless discounts and other profit-killers, but it isn’t cheap.

Content: Article | Author: Yasmin Ghahremani | Source: CFO Publishing | Subjects: Finance, IT / Technology / E-Business, Pricing

Capital projects quite literally shape our world, with more than $10 trillion spent each year to develop the infrastructure that supports modern life—from bridges to hospitals, ports to gasfields, broadband networks to missile defense systems. Yet, not a great deal has changed over the years in how capital projects are delivered, with some practices dating back to the 1920s. With the increasing demand for capital … [ Read more ]

Content: Article | Authors: Badrinath Veeraghanta, James Pearce, John Wolff, Vance Scott | Source: Kearney | Subjects: Finance, Management

Historical cost accounting is fading as Corporate America marches into a new era.

Content: Article | Author: David M. Katz | Source: CFO Publishing | Subjects: Accounting, Finance