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Showing posts with label cost of capital. Show all posts
Showing posts with label cost of capital. Show all posts
Tuesday, 10 October 2017

Warren Buffett’s $1 test and how to tell if a company is allocating its capital wisely

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Buffett is essentially talking about return on invested capital. If a company invests $100 in something at the cost of capital of 10%, ...
Monday, 29 May 2017

Estimating the cost of capital

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The weighted average cost of capital, WACC is the opportunity cost of choosing to invest in the assets generating the free cash flow (FCF) ...
Saturday, 27 May 2017

Conservation of Value and the Role of Risk. Increasing value through reducing the company's risk and its cost of capital.

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Cash flow drives a firm's value creation. Growth and ROIC generate cash flow. Value creation Companies create value: when th...
Friday, 26 May 2017

Fundamental Principles of Firm's Value Creation

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Value creation is determined by cash flows. Cash flows are driven by   revenue growth and  return on invested capital (ROIC). Fo...
Saturday, 29 April 2017

Investors' Minimum Required Rates of Return, Cost of Debt and Cost of Equity

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A company may raise capital by issuing debt or  equity,  Both of which have associated costs. Investors' Minimum Required Ra...
Friday, 27 November 2015

Capital Management in Personal Finance

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A simple equation in finance describes your approach to capital management: Assets = Debt + Equity Everything you own was funded either ...
Wednesday, 8 October 2014

You are a lot better estimating the Cost of Capital without using fancy formulas

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Estimate the Cost of Capital  You have to estimate the cost of capital.   First of all, the cost of equity will always be above the cost...
Sunday, 7 April 2013

Investment Decisions and Fundamentals of Value

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@ 6.47 min Managers should invest in real assets and should not be involved in investing in financial assets which the shareholders can d...
Monday, 19 September 2011

Finance for Managers - Discounted Cash Flow Valuation Method

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One big problem with the earnings-based methods just described is that they are based on historical performance - what happened last year.  ...
Monday, 12 April 2010

Buffett (1992): His thoughts on issuing shares.

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His thoughts on issuing shares.  He concentrated most of his investments in companies where shareholder returns have greatly exceeded the c...
Monday, 12 January 2009

GROWTH'S VALUE

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GROWTH’S VALUE Growth is not free. Its price is the cost of capital necessary to support it. Growth adds value only when the return on capi...