October 2021
Intermediate to advanced
528 pages
10h 11m
English
book
Capital Allocation: Principles, Strategies, and Processes for Creating Long-Term Shareholder Value
by David R. Giroux
Content preview from Capital Allocation: Principles, Strategies, and Processes for Creating Long-Term Shareholder Value
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CHAPTER 2
Capital Allocation in a Slow-Growth World
In a world of structurally lower growth rates, capital allocation decisions are particularly vital to generating value for long-term shareholders. In this chapter, I’ll demonstrate the practical implications of the lower economic growth and other megatrends described in Chapter 1 and their effects on capital allocation. I’ll also examine the importance of developing a sound process in making capital allocation decisions.
Let’s look at two companies that grow revenues at nominal GDP. As displayed in Table 2.1, Firm A grows revenues at a level consistent with nominal GDP during the 1983–2000 period, and Firm B grows at a rate consistent with nominal GDP in the 2001–2018 period.
TABLE 2.1
Same ...
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