A reader asks: I was working with my Controller recently on some financial planning and forecasting and the question came up on what a target ROI should be on a billboard.
The ROI or return on investment or hurdle rate is the minimum return you want to see from capital expenditures. It is the incremental cashflow (earnings before interest, depreciation and amortization) generated by a capital project (e.g. lighting retrofit, new build, digital sign conversion) divided by the incremental capital cost of the project.
OUTFRONT’s executives are fond of saying that they have a 20% minimum ROI requirement for a digital billboard conversion.
What is the minimum ROI your out of home company seeks on capital projects. Take our anonymous poll below:
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We’ll report the results later this week.
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