Expressworks’ Post

💡 Have You Calculated Your Firm’s Cost of Capital? As business owners, CEOs or startup founders — this is a question we should all be asking ourselves. When was the last time you calculated your company’s cost of capital? Just last week, we met a client who has been successfully running his business for 6 years — but had never accounted for the cost of equity he personally invested. Here’s the truth most business owners overlook 👇 Equity is not free. The cost of equity is always greater than the cost of debt. Before raising or using equity for your business, ask yourself: ➡️ Is this the right time to dilute ownership? ➡️ Is there a strategic reason to issue equity instead of debt? ➡️ How will this impact your firm’s Weighted Average Cost of Capital (WACC)? 💡 Tip: Once you’ve calculated your cost of capital, compare it with your Return on Invested Capital (ROIC). If your ROIC is greater than your cost of capital — you’re creating value. If it’s lower, you’re eroding it. Go one step further: calculate your Residual Income (RI) — that’s your true measure of economic profit beyond financing costs. Did you know: A Bain & Company study of more than 2,000 companies indicates that only about one in 10 actually achieves that relatively modest goal over a 10-year period while earning its cost of capital. In other words, nearly 90% of companies fail to achieve that growth objective. At Expressworks, we help founders and CEOs understand, calculate, and optimize their cost of capital — ensuring every penny invested works harder and smarter. If you need help understanding your firm’s financial structure and how to make capital work for you — we’re here to guide you. #Expressworks #SmartLeadersDelegate #WACC #CostOfCapital #FinanceForFounders #FinancialStrategy #BusinessGrowth #Entrepreneurship #FPandA #Advisory #Finance #Accounting