Musings on Markets

FEBRUARY 10, 2021

What is a hurdle rate for a business? In this post, I will start by looking at the role that hurdle rates play in running a business, with the consequences of setting them too high or too low, and then look at the fundamentals that should cause hurdle rates to vary across companies. What is a hurdle rate?

Hurdle Rate 52

Hurdle Rate Currencies Investments Valuation 52

CFO News Room

JANUARY 18, 2023

The question of whether a company is making or losing money should be a simple one to answer, especially in an age where accounting statements are governed by a myriad of rules, and a legion of number-crunchers follow these rules to report profits generated by a firm.

Marketing 130

Marketing Hurdle Rate Investments Accounting 130

Musings on Markets

FEBRUARY 27, 2022

Measuring Profitability The question of whether a company is making or losing money should be a simple one to answer, especially in an age where accounting statements are governed by a myriad of rules, and a legion of number-crunchers follow these rules to report profits generated by a firm.

Hurdle Rate 80

Hurdle Rate Investments Accounting Entertainment 80

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 79

Hurdle Rate Profit and Loss Investments Accounting 79

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 5, 2024

In January 1993, I was valuing a retail company, and I found myself wondering what a reasonable margin was for a firm operating in the retail business. Employee Count & Compensation I nvesting Principle Financing Principle Dividend Principle Hurdle Rate Project Returns Financing Mix Financing Type Cash Return Dividends/Buyback s 1.

Valuation 98

Valuation Financial Analysis Analyzing Data Profit and Loss 98

Barry Ritholtz

DECEMBER 26, 2023

Accounting was very difficult. It’s about a 50% fail rate, something like that. So it’s gonna take a little more confidence, you know, and equities to, because you get your, your hurdle rates higher, you know? And I remember that first level was tough. I had no finance background. Maybe even more.

Marketing 60

Marketing Leadership Finance Investments 60