Measuring Returns The Choices

On all of the investment decisions described above, we have to choose between alternative approaches to measuring returns on the investment made. We will present our argument for return measurement in three steps. First, we will contrast accounting earnings and cash flows, and argue that cash flows are much better measures of true return on an investment. Second, we will note the differences between total cash flows and incremental cash flows and present the case for using incremental cash flows in measuring returns. Finally, we will argue that returns that occur earlier in a project life should be weighted more than returns that occur later in a project life, and that the return on an investment should be measured using time-weighted returns.

Lessons From The Intelligent Investor

Lessons From The Intelligent Investor

If you're like a lot of people watching the recession unfold, you have likely started to look at your finances under a microscope. Perhaps you have started saving the annual savings rate by people has started to recover a bit.

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