Financial Terms Glossary

Hurdle Rate

Formal

The minimum rate of return on an investment - expressed as an annual percentage - that a company needs to generate in order to approve incremental spend. This minimum is imposed because companies themselves pay % interest for raising monies, and need to generate above this hurdle rate to account for risk etc. Some investment banks require at least 20% annual returns on their proposed investment, whereas some food companies need as little as 4%.

Informal

Companies pay interest or return profits on the monies they raise to run their business. When someone inside their own organisation wants to spend (or 'invest') monies, then a minimum projected return is insisted upon to justify spending in the first place. This is a 'hurdle' that you must exceed to gain approval. High levels of returns are required by banks and technology clients, where lower returns are needed from 'safe industries' such a food etc.

What we do

At Shark Finesse we have created business case software to help you win budget and change the way you talk to customers about business value.
Find out how

We'd love to hear from you!

Phone
+44 (0)1256 338635
Address
Grove House, Lutyens Close
Basingstoke, Hampshire
RG24 8AG, UK