added by Matthew Giampetroni · updated 1y ago
Capital Allocation
- Investors generate excess returns when they buy the shares of companies prior to a revision in expectationsabout future cash flows. A key determinant of cash flows is a company’s ability to allocate capital toinvestments that create value. The current principles of accounting do a poor job of separating investmentsand expenses, creating a veil that... See more
from Market-Expected Return on Investment Bridging Accounting and Valuation by Morgan Stanley
Daniel Bakalarz added
- the ability of accounting numbers to represent economic value is severely limited. Next, he emphasized that competitive strategy analysis and valuation should be joined at the hip. The litmus test of a successful strategy is that it creates value, and you can’t properly value a company without a thoughtful assessment of its compet... See more
from Reflections on the Ten Attributes of Great Investors by Dan Callahan
Daniel Bakalarz added
- Companies create value when their investments earn areturn in excess of the opportunity cost of capital. Investors add value when their portfolios generate a return higher than an appropriate market benchmark. Companies continually invest in assets in order to create value in the business, while investors buy a stock at a point in... See more
from Market-Expected Return on Investment Bridging Accounting and Valuation by Morgan Stanley
Daniel Bakalarz added
- Executives must be aware that making investments that create value may be insufficient to sustain the stock price if the market’s expectations are for either a larger amount of investment or a higher return on investment.
from Market-Expected Return on Investment Bridging Accounting and Valuation by Morgan Stanley
Daniel Bakalarz added
- The principal function of most corporations is not to maximize shareholder value, but to maximize the standard of living and quality of work life of those who manage the corporation.
from A Lifetime of Systems Thinking by Russell Ackoff
Avni Patel Thompson added
- In order to balance out for profit motives with long term neutrality the following factors can be taken into consideration: (1) Capital need and ownership of a project, (2) Syndication and relative allocations, (3) Governance rights.
from Venture capital formation for software cooperatives by Alexander Lange
sari added