At the recent RILA Loss Prevention Conference, the VP of Finance for a major retailer gave a presentation on how budget requests. In his presentation, he talked about three measures that they use on a regular basis:
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Payback Period
These measures are used broadly by finance groups to evaluate resource requests, especially capital budget requests. If you would like to learn more about the technical aspects of these tools, you can view the article I wrote on this topic for LP Magazine many years ago on our website. Sometimes it helps to use examples that relate to our specific field and this article that very thing.