Valuation in Context

Innovation

1

Innovation refers to the extent that a business can develop new ideas and turn them into marketable products. Innovation is a key factor when investing as it determines the long-term success of a business.

2

Companies need to ensure that they are able to innovate well, otherwise, they may become uncompetitive in the market. If they become uncompetitive, they will start to lose market share.

3

Younger companies tend to be more risk-taking when it comes to innovation, but often don’t have the experience or resources that more established firms do, to ensure the success of their new ideas.

4

More innovative companies tend to grow quickly and be more profitable over time. Measuring innovation is complicated but a key metric is investment into research and development.

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