For richer entrepreneurs who can finance themselves, on the other hand, an investment is worth doing if it exceeds the opportunity cost of capital, ie, the rate they can earn by putting their money in the bank.

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None is a true bottom-line margin that relates profits to sales after deducting all costs, including the opportunity cost of equity capital.

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Properly measured, the penalty attached to Barclays' investment-banking strategy should also include the opportunity cost of failing to invest its capital in more profitable businesses, such as retail banking.

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The notion behind the yardsticks is simple: a company creates value only if the return on its capital is greater than the opportunity cost of it, or the rate that investors could earn by investing in other securities with the same risk.

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