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

Musings on Markets

JANUARY 9, 2021

To illustrate, consider a practice in valuation, where analysts are trained to add a small cap premium to discount rates for smaller companies, on the intuition that they are riskier than larger companies. In closing, I also want to dispense with the notion that data is objective and that numbers-focused people have no bias.

Valuation 52

Valuation Currencies Numbers Corporate Finance 52

CFO News Room

JANUARY 7, 2023

Data: Trickle to a Flood! It is perhaps a reflection of my age that I remember when getting data to do corporate financial analysis or valuation was a chore. Mean reversion : I am not a knee-jerk believer in mean reversion, but the tendency for numbers to move back towards averages is a strong one.

Marketing 130

Marketing Valuation Corporate Finance Financial Analysis 130

Musings on Markets

JANUARY 5, 2024

The numbers that I computed opened my eyes to how much perspective on the high, low, and typical values, i.e., the distribution of margins, helped in valuing the company, and how little information there was available, at least at that time, on this dimension.

Valuation 98

Valuation Financial Analysis Analyzing Data Profit and Loss 98

Musings on Markets

JANUARY 6, 2023

It is perhaps a reflection of my age that I remember when getting data to do corporate financial analysis or valuation was a chore. Thus, without a sense of what comprises a high or low profit margin for a firm, or what the cost of capital is for the typical company, it is easy to create "fairy tale" valuations and analyses.

Valuation 52

Valuation Corporate Finance Financial Analysis Leverage 52

CFO News Room

NOVEMBER 8, 2022

” look at the Monte Carlo simulations, look at what is the hurdle rate. So, last year, valuations were high, interest rates were low. And I said, “Look, you’ve got to look at where we are with valuations, and you have to look at where the 10-year Treasury is at. Is it at 1.5%? Cean: Yep, yep.

Restructuring 130

Restructuring Planning Accounting Marketing 130