Accounting Measurement

  

Metrics. Like...how much did the coffee mugs with the swear words painted on them cost us? What if we'd sold a million instead of a hundred? There was a union strike last month, and production slowed 10%...how much did that cost us? If we replaced those workers with robots, how much would that change our numbers?

That's the metrical part of Accounting: you measure everything. For more intimate measurements, we suggest doing them privately. Wars have been fought over less.

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Finance: What is Hurdle Rate?62 Views

00:00

Finance allah shmoop shmoop what is ah hurdle rate Well

00:06

a hurdle rate refers to the investment return minimum that

00:10

an investment project requires for it to be worth taking

00:15

the risk and effort to do it in the first

00:17

place All right what does that really mean Well you're

00:20

the new ceo of baby's first chainsaw inc a project

00:23

manager present to you the opportunity to open a new

00:27

line of business called grand pas last chain saw going

00:31

into that business will cost you one hundred million box

00:33

of initial investment in large print labeling walker accessible attachments

00:38

jittery hand stabilizers and some extra denture cream You as

00:43

ceo are looking at eight other projects you can afford

00:47

to do on ly one and the best of the

00:50

eight other projects is a similar product called the unhinged

00:54

midlife crisis chainsaw which has been garnering a lot of

00:58

early interest That project has return rate of fourteen percent

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so the project manager presenting grandpas last chainsaw now has

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a hurdle rate that must be above the highest last

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hurdle or fourteen percent fourteen percent annualized return got it

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and that's as presented by the project manager pitching investment

01:18

in the mid life crisis model meaning they think it'll

01:21

return fourteen percent a year on the investment Got it

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Whichever of those eight competitive project managers presents the most

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believable projections for sales and profits that exceed the others

01:32

well they'll soon become king of the family chainsaw market

01:36

And the ones who don't well let's just say they 00:01:38.855 --> [endTime] use a few extra bodies over in product development

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