Growth Projections: Short, Medium, and Long-Term Insights PPT
This PPT slide, part of the 164-slide Valuation Training PowerPoint presentation, titled "Reasonable Estimates of Growth" presents a framework for understanding growth projections across different time horizons: short term, medium term, and long run. Each section outlines key considerations and assumptions that influence growth estimates.
In the short term, the focus is on the best estimate of likely outcomes. This suggests a reliance on current data and trends to make informed predictions. The visual representation indicates fluctuations, implying that short-term growth can be volatile and subject to immediate market conditions.
Moving to the medium term, the slide emphasizes the importance of assessing the industry outlook and the company's position within that context. It notes that Return on Invested Capital (ROIC) tends to converge towards the cost of capital over time, indicating that as companies mature, their growth rates may stabilize. The mention of growth fading towards GDP suggests that companies will eventually align their growth with broader economic trends, which may limit outsized growth expectations.
The long run section presents a more sobering view, where ROIC equals the cost of capital and real growth is projected at zero. This implies that, over extended periods, companies may struggle to achieve growth beyond what is necessary to maintain their capital structure. The note at the bottom highlights that much of valuation work implicitly or explicitly incorporates growth estimates, with high price-to-earnings ratios often reflecting expectations of high growth.
Overall, this slide serves as a critical reminder for executives to temper growth expectations based on realistic assessments of market conditions and company performance over varying time horizons. Understanding these dynamics is essential for informed decision-making and strategic planning.
This slide is part of the Valuation Training PowerPoint presentation.
EXPLORE MORE SLIDES FROM THIS PRESENTATION
EXPLORE MORE PRESENTATIONS ON
M&A (Mergers & Acquisitions) Valuation Strategic Planning Capital Structure
Flevy is the world's largest knowledge base of best practices.
Leverage the Experience of Experts.
Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.
Download Immediately and Use.
Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.
Save Time, Effort, and Money.
Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.
