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Value: The Four Cornerstones of Corporate Finance
An accessible guide to the essential issues of corporate finance While you can find numerous books focused on the topic of corporate finance, few offer the type of information managers need to help them make important decisions day in and day out. Value explores the core of corporate finance without getting bogged down in numbers and is intended to give managers an accessible guide to both the foundations and applications of corporate finance. Filled with in-depth insights from experts at McKinsey & Company, this reliable resource takes a much more qualitative approach to what the authors consider a lost art. A perfect companion to the Fifth Edition of Valuation, this book will put the various issues associated with corporate finance in perspective.
272 pages, Hardcover
First published October 19, 2010
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1379 people want to read
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Displaying 1 - 30 of 55 reviews
July 13, 2017
While certainly not a page turner, Value provides an excellent overview of the key elements of valuing a business (revenue growth and ROIC). Though this may seem obvious to some, the book (rightly) points out that this simple approach to valuation is often forgotten in the clutter of business jargon and investor hype.
Perhaps most helpful for the corporate strategy or corporate development professional is the discussion of acquisitions and portfolio management, which separates the wheat from the chaff of alleged value-creation opportunities. Value can be created, the authors argue, by improving the target's performance, removing excess capacity from the industry through consolidation, accelerating market access for either party, acquiring needed skills for less than it costs to build them, and by picking winners early. In contrast, value is rarely created by strategies such as roll-ups, "transformational" mergers, or buying cheap (since the latter is difficult to do in practice). The authors also spurn vague strategies such as increasing scale without explanation as to how, diversifying the company, or smoothing out revenues. Simply put, value is created if the acquirer is a better manager of that asset than the target, and only then if the target is acquired for the right price.
The authors also devote substantial time and research to disputing many of the consensus opinions on investor relations. For instance, they say investors do not care whether acquisitions are accretive, whether revenues are diversified, whether earnings are spiky (it evens out over time), or other things that are often taken for granted in many business circles.
Overall this is a valuable (pun-intended) read for anyone interested in corporate finance or strategy. I highly recommend it.
Perhaps most helpful for the corporate strategy or corporate development professional is the discussion of acquisitions and portfolio management, which separates the wheat from the chaff of alleged value-creation opportunities. Value can be created, the authors argue, by improving the target's performance, removing excess capacity from the industry through consolidation, accelerating market access for either party, acquiring needed skills for less than it costs to build them, and by picking winners early. In contrast, value is rarely created by strategies such as roll-ups, "transformational" mergers, or buying cheap (since the latter is difficult to do in practice). The authors also spurn vague strategies such as increasing scale without explanation as to how, diversifying the company, or smoothing out revenues. Simply put, value is created if the acquirer is a better manager of that asset than the target, and only then if the target is acquired for the right price.
The authors also devote substantial time and research to disputing many of the consensus opinions on investor relations. For instance, they say investors do not care whether acquisitions are accretive, whether revenues are diversified, whether earnings are spiky (it evens out over time), or other things that are often taken for granted in many business circles.
Overall this is a valuable (pun-intended) read for anyone interested in corporate finance or strategy. I highly recommend it.
August 8, 2014
PART 1: FOUR CORNERSTONES
1. CORE OF VALUE
companies create value by investing capital from investors to generate future cash flows at rates of return exceeding the cost of that capital.
Growth and ROIC drives value creation
Earning shouldn't be the main performance matrix
ROIC + revenue growth → CF +
Cost of capital → value
e.g. 10% growth with a 20% ROIC → we can estimate the cash generated
application: US stocks have a higher PE due to a higher ROC
2. CONSERVATION OF VALUE
value is created for shareholders when companies generate higher cash flows, not by rearranging investors’ claims on those cash flows
applications: buyback doesn't change total available cash flows (unless tax savings) + acquisition + financial engineering
3. EXPECTATIONS TREADMILL
stock value is driven by expectation, not actual performance
smart investors prefer weak performing companies
4. BEST OWNER
value of a business depends on who is managing it and what strategy they pursue
best-owner life cycle: businesses may need a best owner at different stages
spin-offs are always rewarded
PART 2: THE STOCK MARKET
A model of the stock market (trader and fundamental investors) to illustrate price movement
Fundamental investors matter in the LR (they buy in stakes) while traders matter in the SR
Over the LR, PE is roughly 15 and the return to shareholders is about 6.5 to 7 percent
Stock bubble in industry sector, not the entire market
External shock that drives down share price doesn't mean a bubble
Financial crises are not bubbles
Bubble: irrational
Why do bubbles arise? Difficulty of short selling
Reducing earning volatility and improving earnings through accounting technique don't help
Falling short of expectations by one quarter doesn't matter much
Earning forecasts tend to be too optimistic
Whether analysts raise or lower expected earnings is a more critical factor driving share price than meeting analyst expectations
Companies will save significant energy and time if they assume investors to be as smart as them
PART 3: MANAGING VALUE CREATION
ROIC = operating profit / capital = (price – cost) / capital
Competitive advantage → higher ROIC → price premium or lower cost
Higher ROIC industries are those with attractive structures
Diagram that shows industries with different ROIC with outlook
Median return on capital is close to the cost of capital
Rev growth comes in four types: market share increase, price increase, growth in underlying mkt, acquisition
Business portfolio: passive portfolio underperforms companies with active portfolio management
Ask questions like: why best owner, is it still attractive, new business for synergy?
Divestures are always done under some sort of pressure (one should ignore the impact on the size of the company)
Size only matters when it allows you cheaper way of financing
Most acquisitions don't create value for the acquirer’s shareholders (only bring benefit when theres synergy) because of the high premium offered
Risk should not be evaluated based on historical statistical analysis but fundamental economic one
It is not always the case that all risks should be reduced, eg exchange rate hedging will only smooth earnings in the SR, but doesn't create values (cost of hedging can be large)
Do not undertake risks that will bankrupt a company
Conclusion: shouldn't be too conservative to avoid small risks (which bring return), but need to be careful when facing big risks
Capital structure
Debt does leverage, but with a cost of higher risk
It isn’t value creation per se. without debt, all go to shareholders; with debt, some to lenders
Benefits: tax shield and managerial discipline
Cost: higher risk and higher cost of capital
Financial engineering rarely works
Dividend and buyback (generally good but don't create value)
Thus, little effort should be spent on the optimal capital structure
A new way to evaluate manger’s performance
Break the links between strategic planning and budgeting
Capital budgeting shouldn't be one-unit-fit-for-all
1. CORE OF VALUE
companies create value by investing capital from investors to generate future cash flows at rates of return exceeding the cost of that capital.
Growth and ROIC drives value creation
Earning shouldn't be the main performance matrix
ROIC + revenue growth → CF +
Cost of capital → value
e.g. 10% growth with a 20% ROIC → we can estimate the cash generated
application: US stocks have a higher PE due to a higher ROC
2. CONSERVATION OF VALUE
value is created for shareholders when companies generate higher cash flows, not by rearranging investors’ claims on those cash flows
applications: buyback doesn't change total available cash flows (unless tax savings) + acquisition + financial engineering
3. EXPECTATIONS TREADMILL
stock value is driven by expectation, not actual performance
smart investors prefer weak performing companies
4. BEST OWNER
value of a business depends on who is managing it and what strategy they pursue
best-owner life cycle: businesses may need a best owner at different stages
spin-offs are always rewarded
PART 2: THE STOCK MARKET
A model of the stock market (trader and fundamental investors) to illustrate price movement
Fundamental investors matter in the LR (they buy in stakes) while traders matter in the SR
Over the LR, PE is roughly 15 and the return to shareholders is about 6.5 to 7 percent
Stock bubble in industry sector, not the entire market
External shock that drives down share price doesn't mean a bubble
Financial crises are not bubbles
Bubble: irrational
Why do bubbles arise? Difficulty of short selling
Reducing earning volatility and improving earnings through accounting technique don't help
Falling short of expectations by one quarter doesn't matter much
Earning forecasts tend to be too optimistic
Whether analysts raise or lower expected earnings is a more critical factor driving share price than meeting analyst expectations
Companies will save significant energy and time if they assume investors to be as smart as them
PART 3: MANAGING VALUE CREATION
ROIC = operating profit / capital = (price – cost) / capital
Competitive advantage → higher ROIC → price premium or lower cost
Higher ROIC industries are those with attractive structures
Diagram that shows industries with different ROIC with outlook
Median return on capital is close to the cost of capital
Rev growth comes in four types: market share increase, price increase, growth in underlying mkt, acquisition
Business portfolio: passive portfolio underperforms companies with active portfolio management
Ask questions like: why best owner, is it still attractive, new business for synergy?
Divestures are always done under some sort of pressure (one should ignore the impact on the size of the company)
Size only matters when it allows you cheaper way of financing
Most acquisitions don't create value for the acquirer’s shareholders (only bring benefit when theres synergy) because of the high premium offered
Risk should not be evaluated based on historical statistical analysis but fundamental economic one
It is not always the case that all risks should be reduced, eg exchange rate hedging will only smooth earnings in the SR, but doesn't create values (cost of hedging can be large)
Do not undertake risks that will bankrupt a company
Conclusion: shouldn't be too conservative to avoid small risks (which bring return), but need to be careful when facing big risks
Capital structure
Debt does leverage, but with a cost of higher risk
It isn’t value creation per se. without debt, all go to shareholders; with debt, some to lenders
Benefits: tax shield and managerial discipline
Cost: higher risk and higher cost of capital
Financial engineering rarely works
Dividend and buyback (generally good but don't create value)
Thus, little effort should be spent on the optimal capital structure
A new way to evaluate manger’s performance
Break the links between strategic planning and budgeting
Capital budgeting shouldn't be one-unit-fit-for-all
This entire review has been hidden because of spoilers.
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April 17, 2023This book was quite a challenging read and took me a significant amount of time to finish. However, I believe it's an excellent resource for any professional in the financial industry. The content is informative and relevant, providing valuable insights and perspectives.
September 10, 2020
Wonderful concisely written book that hits on most important points about creating and conserving value.
July 27, 2017
I really liked the first 100 pages of the book, but the rest felt redundant.
August 22, 2018
More than twenty years ago McKinsey & Company published the book Valuation. It became the de facto required reading for the coming generations of aspiring young equity analysts and portfolio managers struggling to master the craft of performing a cash flow valuation, a DCF. Now McKinsey through three of their consultants publish the sequel called Value. Let’s hope this text will also become required reading. The perspective is turned on its head and the focus has shifted to how corporations should manage their business to build long term shareholder value, but also on how they should try to understand the unfathomable equity market and build mutually beneficial relations with the right investors.
The practice of corporate governance at larger institutions often try to balance the many viewpoints of different so called stakeholders, be that employees and their right to unionize, the society and corporate disclosures of pollution levels etc. Sometimes the governance slightly looses track of one stakeholder: the investors in the mutual fund itself, the future retirees of the pension fund etc. This book concern itself with the owner as a stakeholder. Don’t get me wrong, corporate governance often covers shareholder rights at AGMs etc. Normally, however, it doesn’t cover the more strategic and operational ownership issues that a corporate board faces.
Topics covered includes a motivation of why long term shareholder value is a concept to take to heart; the value creation process in itself with growth, ROIC, competitive advantage period and cost of capital as core concepts; how to think about risk and make sure the company doesn’t loose value as soon as it’s created; methods for management to structure their reasoning regarding the stock market; and also valuable opinions on methods for corporate communication with investors, so called IR.
In many ways the book is a contemporary version of the huge number of value based management books that was published in the late 90’s. The ground breaking classic in the genre being Creating Shareholder Value from 1986 by Alfred Rappaport. The grade “2” for knowledge is perhaps slightly generous. You have heard or read about most of the topics previously, often also in greater detail. The great benefit of the book is that it covers almost all of the aspects that a company would need to think of in this area. It’s all there, how to think about M&A, dividends versus buy backs, the balance between profits today and profits tomorrow, risk management etc. It’s also an easy read with limited financial jargon, written by experienced consultants. And it’s all pretty much correct in my view.
The bonus on top of that accessibility and broad coverage of relevant topics is that the big consultancy McKinsey brings back the important - but due to greed and short termism by the likes of Enron and Worldcom discredited - topic shareholder value into the limelight. The shareholder is the receiver of the residual cash flow after all other stakeholders get their compensation. Only he play the important role to try to balance all others claims. If this is not done properly and shareholder value becomes a forgotten concept economies will not allocate its scarce capital efficiently and the well-being of our societies will decrease. This is important and this is why I hope we have seen the birth of a new standard volume to be read.
Investors should read the book to become better owners. Corporate managements and those in the IR departments will gain a better understanding of why they are in business in the first place.
The practice of corporate governance at larger institutions often try to balance the many viewpoints of different so called stakeholders, be that employees and their right to unionize, the society and corporate disclosures of pollution levels etc. Sometimes the governance slightly looses track of one stakeholder: the investors in the mutual fund itself, the future retirees of the pension fund etc. This book concern itself with the owner as a stakeholder. Don’t get me wrong, corporate governance often covers shareholder rights at AGMs etc. Normally, however, it doesn’t cover the more strategic and operational ownership issues that a corporate board faces.
Topics covered includes a motivation of why long term shareholder value is a concept to take to heart; the value creation process in itself with growth, ROIC, competitive advantage period and cost of capital as core concepts; how to think about risk and make sure the company doesn’t loose value as soon as it’s created; methods for management to structure their reasoning regarding the stock market; and also valuable opinions on methods for corporate communication with investors, so called IR.
In many ways the book is a contemporary version of the huge number of value based management books that was published in the late 90’s. The ground breaking classic in the genre being Creating Shareholder Value from 1986 by Alfred Rappaport. The grade “2” for knowledge is perhaps slightly generous. You have heard or read about most of the topics previously, often also in greater detail. The great benefit of the book is that it covers almost all of the aspects that a company would need to think of in this area. It’s all there, how to think about M&A, dividends versus buy backs, the balance between profits today and profits tomorrow, risk management etc. It’s also an easy read with limited financial jargon, written by experienced consultants. And it’s all pretty much correct in my view.
The bonus on top of that accessibility and broad coverage of relevant topics is that the big consultancy McKinsey brings back the important - but due to greed and short termism by the likes of Enron and Worldcom discredited - topic shareholder value into the limelight. The shareholder is the receiver of the residual cash flow after all other stakeholders get their compensation. Only he play the important role to try to balance all others claims. If this is not done properly and shareholder value becomes a forgotten concept economies will not allocate its scarce capital efficiently and the well-being of our societies will decrease. This is important and this is why I hope we have seen the birth of a new standard volume to be read.
Investors should read the book to become better owners. Corporate managements and those in the IR departments will gain a better understanding of why they are in business in the first place.
November 17, 2019
There's a lot of hype in corporate finance. People with very impressive titles use long words and complex spreadsheets to show how they will make the company worth more money--or in corporate-speak, create value. But, as the 2007-2008 financial collapse shows us, there are a lot of ways that people say will create value that's just false. But the bottom line (as this book teaches) to create value you have to have at least: 1) more revenue collected and/or; 2) better return on invested cash. The fanciest business deals in the world must in the end be able to be boiled down to these outcomes.
The rest of the book discusses various methods companies have used to create this kind of value. But you should know this book is for large companies, especially publicly traded companies. This is not a book about how to run your company. It's mostly about mergers and acquisitions, though there are some other areas in there. So it's not applicable for every business leader.
Probably the best part of the book is where they debunk a handful of popular financial strategies, showing how they don't actually create value. In the end, you don't get value from combining companies per se, even if you use cool words like diversification or economies of scale. You get value if the companies are going to be run better under the new leaders than they were the old leaders.
The rest of the book discusses various methods companies have used to create this kind of value. But you should know this book is for large companies, especially publicly traded companies. This is not a book about how to run your company. It's mostly about mergers and acquisitions, though there are some other areas in there. So it's not applicable for every business leader.
Probably the best part of the book is where they debunk a handful of popular financial strategies, showing how they don't actually create value. In the end, you don't get value from combining companies per se, even if you use cool words like diversification or economies of scale. You get value if the companies are going to be run better under the new leaders than they were the old leaders.
November 29, 2020
Business titan Jack Welch once expressed the opinion that "Shareholder value is the dumbest idea in the world .. Short term profits should be allied with an increase in the long term value of the company." Tim Koller, Richard Dobbs and Bill Huyett of McKinsey & Co certainly agree as they eschew corporate environments in which excessive chase trendy ideas to raise share prices.
A company's value springs from its use of investors capital to produce future cash flows at rates of return above what the investors require to provide the capital. This Revenue Growth and Return On Invested Capital (ROIC) are the dual engines for creating value. This is the first ( Core of Value ) of the "four cornerstones of value" that the authors recommend as enduring principles that can help executives deliver robust total returns to the shareholders.
Ultimately, C Suite professionals task lies in discovering how to navigate long-term value propositions while delivering sufficient short-term financial performance to satisfy investors.
The book is a short and robust guide to executives looking for a practical grounding on creating corporate value.
A company's value springs from its use of investors capital to produce future cash flows at rates of return above what the investors require to provide the capital. This Revenue Growth and Return On Invested Capital (ROIC) are the dual engines for creating value. This is the first ( Core of Value ) of the "four cornerstones of value" that the authors recommend as enduring principles that can help executives deliver robust total returns to the shareholders.
Ultimately, C Suite professionals task lies in discovering how to navigate long-term value propositions while delivering sufficient short-term financial performance to satisfy investors.
The book is a short and robust guide to executives looking for a practical grounding on creating corporate value.
October 29, 2022
One of the best & most engaging books on Corporate Finance I've read.
The book focuses on what is Value, how do you create value, and how you find value in the different areas within corporate finance.
First, the book describes the four cornerstones of Value:
1. Companies create value by investing capital to generate future cash flows at return rates exceeding cost of capital
2. Value is created by generating higher cashflows, not by rearranging investors' claims
3. Share price changes are driven by stock market expectations, not the company's actual performance
4. Value of a business depends on who is managing and what strategy they use.
After describing these cornerstones, the authors build on these assumptions to apply to various actions and scenarios in corporate finance such as stock market performance, M&A, Capital Structure, & etc. This is a great reference book that I will be returning to frequently.
5/5 Excellent, indispensable reading
The book focuses on what is Value, how do you create value, and how you find value in the different areas within corporate finance.
First, the book describes the four cornerstones of Value:
1. Companies create value by investing capital to generate future cash flows at return rates exceeding cost of capital
2. Value is created by generating higher cashflows, not by rearranging investors' claims
3. Share price changes are driven by stock market expectations, not the company's actual performance
4. Value of a business depends on who is managing and what strategy they use.
After describing these cornerstones, the authors build on these assumptions to apply to various actions and scenarios in corporate finance such as stock market performance, M&A, Capital Structure, & etc. This is a great reference book that I will be returning to frequently.
5/5 Excellent, indispensable reading
February 22, 2020
I thought that this book was intended to be accessible to the general market. I obviously missed the mark on that as the book was obviously geared to executives of corporations. It didn’t feel applicable to small businesses who may be trying to grow into a larger organization by creating value. I tried to boil down the chapter highlights in my notes to drive at the points that are applicable to businesses of any size.
March 15, 2018
Very good overview of basic financial management / capital allocation concepts. Recent graduates / MBAs will need to exercise discretion in applying these principles depending on the political realities of their organization - what's sound practice in theory may cause career stagnation if they don't agree with the unwritten values and priorities of your organization / superiors.
August 1, 2021
creating value to shareholders, conserving value and a view on portfolio strategies. A book about corporate finance and also outsiders valiating companies. Many insights on long term and short term investments
October 17, 2021
I was impressed by how this book breaks down value creation in simple terms with insightful examples from history. This book could easily be +500 pages, but they managed to stick to the core ideas, which makes this book a very enjoyable read.
February 27, 2018
great business concepts
December 29, 2019
Okay, easy to read but not ground-breaking.
March 18, 2021
Great book, with great examples. Covered many topics from corporate finance to corporate and business unit strategy with ease.
April 20, 2021
A good primer on corporate strategy with a good, top level perspective.
May 12, 2021
Dense insights on corporate finance and strategies that work or don’t work for assessing value. I’ll definitely need to revisit this book.
June 13, 2021
Most of my memory of this book is gone.
Want to read
December 31, 2021...
January 3, 2022
Good analysis- dry as a bone.
May 14, 2023
Good topics and interesting points, but way too wordy for what it is, also since all the data stops at 2009 (published in 2010) it’s a bit outdated at this point would be interested in seeing this theory applied today.
Read
July 22, 2025lol love my life that this is what i’m reading
December 8, 2018
Very detailed accounts and empirical evidences on different aspects of corporate finance.
January 16, 2013
This very clean book on the essential principles of value creation is targeted toward C level decision makers rather than investors. This focus makes it no less valuable to anyone who wants to understand corporate level strategy, the stock market or investing.
Author and McKinsey partner Tim Koehler does an excellent 1 minute and 23 second introduction to this book on Amazon. You can link to it here http://www.amazon.com/gp/mpd/permalin...
Part One covers the four cornerstones.
The Four Cornerstones of Value are:
The Core of Value: A business's value is driven by its growth and return on capital, and the resulting cash flows. (Chapter 2)
The Conservation of Cash Flow: Value is created when companies generate higher cash flows, not by simply rearranging investors' claims on cash flows. (Chapter 3)
The Expectations Treadmill: Movements in company share price reflect changes in the stock market's expectations, not just underlying performance. (Chapter 4)
The Best Owner Principal: The Value of a business is not absolute, rather, depends on who is managing it and the strategy pursued. (Chapter 5)
Part Two covers The Stock Market
It covers the movements of the Stock Market and their relevance more effectively than I have read anywhere else.
Part Three Covers Managing Value Creation
This section addresses how C level executives should apply the principles of the first two parts to manage value.
I like to listen to audio books every day, but I knew there were many visual elements of the book which add greatly to the overall content. I decided to get the audio download with the accompanying 54 page pdf. All the frequently referenced exhibits are on pages 2 through 51 of the pdf. Appendix A: The Math of Value, pages 52 through 56 breaks down, "the core-of-value cornerstone as a simple formula along with its derivation." The last two pages illustrate evaluation by metrics other than PE ratios.
Some people could find listening to audio of a book that is so saturated with relevant illustrations unproductive, but it works very well for my learning style, especially since I knew in advance I would follow my listening with a quick re-read of the hard-cover version sometime within the next month. I wish more illustration rich books would allow this option. The absorption level really goes up with a second learning method (audio then visual). There is also an accompanying workbook, which I haven't purchased.
Author and McKinsey partner Tim Koehler does an excellent 1 minute and 23 second introduction to this book on Amazon. You can link to it here http://www.amazon.com/gp/mpd/permalin...
Part One covers the four cornerstones.
The Four Cornerstones of Value are:
The Core of Value: A business's value is driven by its growth and return on capital, and the resulting cash flows. (Chapter 2)
The Conservation of Cash Flow: Value is created when companies generate higher cash flows, not by simply rearranging investors' claims on cash flows. (Chapter 3)
The Expectations Treadmill: Movements in company share price reflect changes in the stock market's expectations, not just underlying performance. (Chapter 4)
The Best Owner Principal: The Value of a business is not absolute, rather, depends on who is managing it and the strategy pursued. (Chapter 5)
Part Two covers The Stock Market
It covers the movements of the Stock Market and their relevance more effectively than I have read anywhere else.
Part Three Covers Managing Value Creation
This section addresses how C level executives should apply the principles of the first two parts to manage value.
I like to listen to audio books every day, but I knew there were many visual elements of the book which add greatly to the overall content. I decided to get the audio download with the accompanying 54 page pdf. All the frequently referenced exhibits are on pages 2 through 51 of the pdf. Appendix A: The Math of Value, pages 52 through 56 breaks down, "the core-of-value cornerstone as a simple formula along with its derivation." The last two pages illustrate evaluation by metrics other than PE ratios.
Some people could find listening to audio of a book that is so saturated with relevant illustrations unproductive, but it works very well for my learning style, especially since I knew in advance I would follow my listening with a quick re-read of the hard-cover version sometime within the next month. I wish more illustration rich books would allow this option. The absorption level really goes up with a second learning method (audio then visual). There is also an accompanying workbook, which I haven't purchased.
August 12, 2024
Value: The Four Cornerstones of Corporate Finance was an extremely practical book in terms of understanding investing. Moreover one thing that was hammered into me repeatedly was the equation of “Return on Incremental Capital” and how that turns companies into value creation machines. I’ve always considered myself a lucky long term investor where I’ve mostly made money from buying dips in popular tech stocks that have long term managed to stick around. Each time I was buying in, I would do so with the notion that since I used Instagram or because I personally had an iPhone, it was probably long term a great bet. But it didn’t work out so well when I thought Beyond Meat tasted pretty good. Turns out, there are more value creation factors at play than product quality that affect the stock price and long term prospects.
Originally published here: https://datastream.substack.com/p/suc...
Originally published here: https://datastream.substack.com/p/suc...
May 25, 2013
Since the book is written by McKinsey, it's only fair that the target audience of the book is company management. To create value, it boils down to grow the revenue or make more efficient use of the company's asset thus achieving a higher ROIC than cost of capital. Despite so many shareholder unfriendly management out there, I have to say that sometimes the financial society gives too little credit to the management because it's not that easy to grow a business and create sustainable value without many angry customers and receiving retaliation from competitors.
December 30, 2014
In Value, some career McKinsey management consultants share the cornerstones they see that business use to build value for their stock holders. They include Core of Value, Conservation of Value, Expectations Treadmill, and Best Owner. The authors do this by spending time describing how the markets work by discussion the different classes of investors and how they influence the markets. They then spend the rest of the book describing how the leaders of the company drive value by building on the cornerstones.
February 21, 2014
I wanted to learn about corporate finance with minimum effort. Auditing a class or reading a textbook were out of options. I was looking for an audio book. Listening to this book while driving worked for me. (I had some background in finance.) Although there were references to the graphs or equations in the pdf companion of the audiobook, I could follow the arguments well without seeing them. I recommend this book to people interested in knowing how the finance of big corporations work. No background is needed. If you are listening to the audio book, play it at x1.25 or x1.5 speed :)
January 1, 2019
McKinsey & Company discuss the value of companies and their stocks. How worth is assumed, assigned and manipulated. They discuss short term and long term strategies in detail.
Why I started this book: I wanted a quick read for the new year, kick it off with a book already crossed off from my list.
Why I finished it: The redeeming feature of this book was the length. Short. Like ripping of a band-aid the pain was temporary. That's not fair, I'm sure that it's an interesting investing book, but it wasn't not what I was expecting from a Navy Professional Reading title.
Why I started this book: I wanted a quick read for the new year, kick it off with a book already crossed off from my list.
Why I finished it: The redeeming feature of this book was the length. Short. Like ripping of a band-aid the pain was temporary. That's not fair, I'm sure that it's an interesting investing book, but it wasn't not what I was expecting from a Navy Professional Reading title.
Displaying 1 - 30 of 55 reviews