In a business with:
1) a positive spread between return on invested capital and cost of capital, growth adds value.
2) a negative spread between return on invested capital and cost of capital, growth destroys value.
3) at zero spread, growth has no impact.
It depends.
1) a positive spread between return on invested capital and cost of capital, growth adds value.
2) a negative spread between return on invested capital and cost of capital, growth destroys value.
3) at zero spread, growth has no impact.
It depends.
https://twitter.com/nomad_capital/status/1464564264543346702
"A company creates value when its investments earn a return higher than the opportunity cost of capital."
What is your opportunity cost of capital right now? If you can't write it down, you don't know what it is. The easiest person to fool is yourself.
What is your opportunity cost of capital right now? If you can't write it down, you don't know what it is. The easiest person to fool is yourself.
"Corporate value = steady-state value + present value of growth opportunities (PVGO).
Note that if the return on incremental investment equals the cost of capital, the PVGO collapses to zero and
the value of the firm is simply the steady-state value." morganstanley.com/im/publication…
Note that if the return on incremental investment equals the cost of capital, the PVGO collapses to zero and
the value of the firm is simply the steady-state value." morganstanley.com/im/publication…
“I’d rather have a $10 million business making 15% than a $100 million business making 5%. I have other places I can put the money." Buffett
"Every portfolio manager has other places they can put the money (i.e., other stocks)." mjbaldbard.files.wordpress.com/2020/09/michae…
"Every portfolio manager has other places they can put the money (i.e., other stocks)." mjbaldbard.files.wordpress.com/2020/09/michae…
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