To do it right, let go of your company’s “evolutionary past” and take a granular look at where your profitability comes from today—it might surprise you.
Content: Article | Author: Jonathan Byrnes | Source: “Chief Executive” | Subjects: Finance, Management
The leading companies are harnessing the power of data to lessen the impact of inflation on their business and maintain profit margins.
Content: Article | Authors: Cristobal Lowery, Jean-Paul Savelkoul, Remko de Bruijn, Roger van Engelen | Source: “Kearney” | Subjects: Finance, Operations
Investors consult detailed, quantitative models before making decisions. Shouldn’t corporate managers have a similar understanding of how the market values their company, so they can make informed decisions to maximize shareholder value? An EY-Parthenon analysis of quarterly data from thousands of companies in hundreds of industries over a period of 20 years has identified six critical factors that account for most of the variability in … [ Read more ]
Content: Article | Authors: John Trustman, Louise Keely | Source: “Harvard Business Review” | Subject: Finance
Weighted average and median P/E ratios rarely diverge significantly—and when they do, the gap soon closes.
Content: Article | Author: David Schwartz | Source: “McKinsey Quarterly” | Subjects: Finance, Market/Investment
Companies often shy away from the method because they fear it or believe it means “budgeting from zero.” In reality, it’s a structured process that can build a culture of cost management.
Content: Article | Authors: Carey Mignerey, Kyle Hawke, Shaun Callaghan | Source: “McKinsey Quarterly” | Subjects: Accounting, Finance
New proposed restrictions on companies buying back their own stock would likely backfire.
Content: Article | Authors: Alice Bonaimé, Theo Vermaelen | Source: “INSEAD Knowledge” | Subject: Finance
At most large companies, the performance management system is a hodgepodge of legacy systems. KPIs are not aligned across the organization. Different information systems categorize data differently. Decision rights as to who decides what data to collect are so distributed that there is no consistent approach to reporting across the entire company.
As a result, the finance organization spends an inordinate amount of time simply putting … [ Read more ]
Content: Article | Authors: Alexander Roos, James Tucker, Jeff Kotzen, Julien Ghesquieres, Marc Rodt, Tim Nolan | Source: “Boston Consulting Group (BCG)” | Subjects: Finance, Management
Among CFOs, alternative approaches to budgeting are getting a lot of attention. In particular, Beyond Budgeting, a concrete alternative to traditional budgeting, is gaining mainstream traction. The approach is producing impressive results at a growing number of global companies. Moreover, a BCG study confirmed that Beyond Budgeting has significant benefits: 59% of 174 finance executives surveyed reported increased sales, 56% saved significant costs in the … [ Read more ]
Content: Article | Authors: Bjarte Bogsnes, Hardik Sheth, Sebastian Stange | Source: “Boston Consulting Group (BCG)” | Subject: Finance
A new approach to uncovering the sum of all the parts of a modern firm.
Content: Article | Authors: Frederico Belo, Maria Ana Vitorino | Source: “INSEAD Knowledge” | Subjects: Accounting, Finance
McKinsey analysis of more than 2,200 large global companies reveals the importance of monitoring both economic-profit growth and revenue growth.
Content: Article | Authors: Peter Stumpner, Tim Koller, Vartika Gupta | Source: “McKinsey Quarterly” | Subject: Finance
Can an algorithm outperform the average angel investor? And if it can, does that also mean it will make less biased investments? Researchers put these questions to the test: They built an investing algorithm and put it head to head with 255 angel investors in a simulation, asking it to select the most promising investment opportunities among 623 deals from one of the largest European … [ Read more ]
Content: Article | Authors: Charlotta Siren, Dietmar Grichnik, Ivo Blohm, Joakim Wincent, Malin Malmstrom, Torben Antretter | Source: “Harvard Business Review” | Subjects: Entrepreneurship, Finance, Venture Capital
A new approach to analyzing capital-intensive resource investments—Dynamic Decision Management—views projects as adjustable sequences of decisions.
Content: Article | Authors: Christian Loy, Hanjo Arms | Source: “Kearney” | Subjects: Finance, Management
New research shows that companies that know how to shift critical resources where and when they’re needed share common traits. Rigor is the first one.
Content: Article | Authors: Massimo Garbuio, Tim Koller, Zane Williams | Source: “McKinsey Quarterly” | Subjects: Finance, Management
Traditional zero-based budgeting is often a paralyzing experience, and yields only temporary benefits. Done right, ZBB can permanently lower your company’s cost base without losing focus on profitable growth.
Content: Article | Authors: Carlos Higo, Daniel Mahler, Esteban Bowles | Source: “Kearney” | Subject: Finance
ost executives care about creating long-term shareholder value but haven’t had the right tool to track it. In a recent paper published in Strategic Management Journal, Wharton management professor Nicolaj Siggelkow and Phebo Wibbens, assistant professor of strategy at INSEAD, introduce a new performance measure called LIVA – Long-term Investor Value Appropriation. In the following opinion piece, Siggelkow and Wibbens explain why they developed LIVA … [ Read more ]
Content: Article | Authors: Nicolaj Siggelkow, Phebo Wibbens | Source: “Knowledge@Wharton” | Subject: Finance
Buybacks are under attack as a short-term stock price manipulation scheme, allowing insiders to cash out at inflated stock prices. This manipulation hypothesis predicts that, as a result of buybacks, companies will underinvest, undermining long-term performance and shareholder value. Recent research tests this hypothesis using an international sample that contains approximately 10,000 buyback announcements made by U.S. firms and 10,000 made by non-U.S. firms … [ Read more ]
Content: Article | Author: Theo Vermaelen | Source: “INSEAD Knowledge” | Subject: Finance
Strong management teams spend less time obsessing over the current income statement and more time focusing on a different report: the forecast. Not all forecasts are built alike, however. We find that a great forecast has five attributes.
Content: Article | Authors: C. Fritz Foley, Mark Khavkin | Source: “Harvard Business Review” | Subject: Finance
With tax rules changing and interest rates set to rise globally, companies need to organize their operations around a new value equation.
Content: Article | Author: Liz Sweigart | Source: “strategy+business” | Subjects: Accounting, Finance
Ostensibly about Bitcoin, this is an excellent finance/economics article that explains the differences between assets, currencies, commodities and collectibles and the difference between trading (pricing) and investing (valuing).
Content: Article | Author: Aswath Damodaran | Subjects: Economics, Finance
When your company establishes a credible long-term strategy — including a way to play in the market and the capabilities to deliver — it sets up a high level of certainty. In valuation terms, your market value (your shareholders’ expectations) will more closely reflect your intrinsic value (the profits you consistently create). This is a tremendous source of strength, but it also triggers the paradox … [ Read more ]
Content: Article | Authors: Aaron Gilcreast, Larry Jones | Source: “strategy+business” | Subjects: Finance, Management, Strategy