Capital allocation
How management uses the cash a business generates, across reinvestment, acquisitions, debt repayment, dividends, buybacks and retained cash.
Over many years, capital allocation decides much of a company's value. Reinvestment and acquisitions create value only when they earn more than the cost of capital; buybacks help remaining shareholders only at sensible prices. Judge the record over a decade.
Learn more in these lessons
- Capital allocationHow do you judge what management does with a company's cash?
- Evaluating management and governance in practiceHow can you judge a company's management without ever meeting them?
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