Financial Tools for CMOs to Prioritize Multi-Year Initiatives

CMOs can make better investment decisions and enhance the organization’s perception of marketing by leveraging financial modeling techniques. Capital budgeting methods help drive cross-functional alignment by establishing a common way to prioritize growth initiatives. Analyzing net present value, profitability indexes and internal rates of return enables accurate ranking of multiyear investments. In this report, we describe three capital budgeting tools — net present value, profitability index and internal rate of return — that CMOs can use to analyze their multiyear investment choices.