Cost of equity
The return a shareholder demands for putting money into this business rather than into a risk-free asset.
How to read the number
Not an expense in the accounts but an alternative: a business that fails to clear this bar is formally profitable and destroying value at the same time.
When the metric lies
The estimate depends heavily on the chosen beta and risk premium. Different analysts arrive at noticeably different rates for the same company.
Also known as: required return on equity