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To do that, executives need to rediscover the concept of economic profit (EP) — that is, revenue minus not just operating and administrative costs, but also the cost of the capital needed to produce that revenue.
Well, he's a hedge fund veteran who has always taken a skeptical view of Wall Street, treating it more as a loopy rich uncle than the efficient information processor of standard finance theory. With Amazon, though, nobody emphasizes EPS. But he's also always been ready to shift gears when the mood turns stingy.
Breakthrough Finance. PUMA has led the field; its then-CEO Jochen Zeitz conceived an Environmental Profit and Loss (EP&L) for the company with PwC and Trucost. Zeitz is also rolling out the EP&L across the holding group PPR. Breakthrough involves a shift to new types of impact investment.
To help provide a better factual base for this debate, MGI, working with McKinsey colleagues from our Strategy & Corporate Finance practice as well as the team at FCLT Global, began last fall to devise a way to systemically measure short-termism and long-termism at the company level.
I know that finance professors at business schools throughout the nation teach MBAs and executives that, for the sake of economic efficiency, a company should “maximize shareholder value.” I disagree with this priority.
These organizations, also known as elite professional service (EPS) firms, have some of the most well-developed and longstanding on-campus programs. In the EPS world, on-campus “school lists” have two tiers, based largely on prestige. ” How It Works — and How “Regular” Applicants Get Ignored.
Nobody writes a paean to the search for 9 percent EPS growth. If you believe the best-selling business books from the last 25 years, companies are "In Search of Excellence" or trying to go from "Good to Great." Moreover, pure growth targets are even wackier right now.
Firms like these have created tools like Environmental Profit & Loss (EP&L) statements and Social Return on Investment (SROI) to capture a more complete picture of their businesses. Whether in politics, finance, or business, there is growing concern that many leaders have lost their moral compass. The Moral Frame.
If nothing else, President Trump’s initiative might begin a much-needed conversation about how firms can move beyond simplistic quarterly EPS targets towards a deeper discussion with their stakeholders about their long-term plans for creating real value.
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