Publications

2025
Working Paper

Cash Flow Volatility, Return Predictability and Stock Price Decompositions: Why You Should Scale Prices by Trend Cash Flows

By: Sebastian Hillenbrand and Odhrain McCarthy

We address two inconvenient facts in asset pricing: (i) valuation ratios are often more related to future cash flows than to returns, and (ii) they mostly fail to predict returns. We show that these issues arise because stock prices are scaled by cash flows that... View Details

Keywords: Cash Flow; Volatility; Investment Return; Asset Pricing; Forecasting and Prediction; Valuation; Stocks

SSRN

17 Nov 2017
News

Cashing Out For Happiness

March 2011
Case

Cash Flow Productivity at PepsiCo: Communicating Value to Retailers

PepsiCo developed a new metric that better measured the value added by Pepsi products than did gross margin, the traditional metric used by retailers to determine shelf space and promotional activity. The new metric, cash flow productivity, captured the value of... View Details

Keywords: Customer Relationship Management; Cash Flow; Measurement and Metrics; Distribution; Performance Productivity; Value Creation; Food and Beverage Industry; Retail Industry

December 9, 2020
Article

Give Employees Cash to Purchase Their Own Insurance

By: Regina E. Herzlinger and Barak D. Richman

Employers’ and employees’ health care costs continue to skyrocket. A solution is to allow employers to give employees pre-tax cash to purchase their own health insurance. This move, enabled by a newly enacted federal rule, would put competitive pressure on insurers,... View Details

Keywords: Health Insurance; Health Care and Treatment; Insurance; Employees; Government Legislation

Register to Read

August 2022
Teaching Note

Mastercard: Creating a World Beyond Cash

By: Sunil Gupta and Julia Kelley

Teaching Note for HBS Case No. 522-001. View Details

29 Apr 2014
Working Paper Summaries

Comparing the Cash Policies of Public and Private Firms

Keywords: by Joan Farre-Mensa

April 2025 (Revised May 2025)
Background Note

Customer Acquisition and the Cash Flow Trap

By: E. Ofek, Barak Libai and Eitan Muller

Startups as well as existing firms recognize the need to invest in order to acquire customers for their new ventures. And as each customer is expected at some point to have generated sufficient gross margins to cover their CAC, management expects that, soon enough, the... View Details

Keywords: Business Model; Customers; Forecasting and Prediction; Cash Flow; Business or Company Management

Educators

13 Sep 2004
Research & Ideas

Cash and the Woman-Owned Business

Building sufficient cash reserves to launch a business and managing subsequent fundraising are challenges for every entrepreneur, but they are particularly daunting tasks for women. Women often come up short of View Details

Keywords: by Candida Brush, Nancy M. Carter, Elizabeth Gatewood, Patricia G. Greene & Myra M. Hart

winter 1996
Article

The Market Pricing of Cash Flow Forecasts: Discounted Cash Flow vs. the Method of Comparables

By: S. N. Kaplan and R. S. Ruback

Keywords: Price; Cash Flow; Forecasting and Prediction

October 23, 2003
Article

Avoiding Free Cash Flow Traps

By: David Hawkins

Keywords: Cash Flow

June 2002
Article

Assessing Operating Cash Flow Quality

By: David F. Hawkins

Keywords: Cash Flow; Quality

January 2020 (Revised December 2020)
Technical Note

The Cash Flow Curve in Startups

By: Stig Leschly

Educators

Video

James Cash - Making A Difference

August 2021
Teaching Note

DigiPlex: Ante-Up or Cash Out

By: Josh Lerner

Teaching Note for HBS Case No. 821-080. View Details

Keywords: Venture Capital; Private Equity

Article

Are Cash Take-Over Bids Unethical?

By: Russell Taussig and Samuel L. Hayes III

March 2025
Case

GiveDirectly: Can Direct Cash Transfers End Extreme Poverty?

By: Natalia Rigol, Benjamin N. Roth, Sarah Mehta and John Schultz

Founded in 2008, GiveDirectly was a nonprofit organization that used direct cash transfers—giving people cash via mobile money—to combat poverty worldwide. By August 2024, the organization had transferred over $800 million to poor people in targeted communities and... View Details

Keywords: Economics; Ethics; Growth and Development; Philanthropy and Charitable Giving; Research; Nonprofit Organizations; Poverty; Africa; Asia; Latin America; North and Central America; United States

Educators

December 2002
Background Note

Simulation of Prices, Rates and Cash Flows (B)

Considers more advanced issues required for complete cash flow simulation, including residual diagnostics (to determine whether a process has been identified correctly), simulation of nonmarket risk variables, and real options. View Details

Keywords: Price; Cash Flow