Forbes MBA Ranking

The Forbes MBA ranking provides a ranking of "best business schools".

The ranking started in 1999 and is done every two years.

However, this ranking is a bit different from other "top" rankings.

It provides a very useful and needed ranking based on Return on Investment (ROI).

Therefore, you should understand what criteria are used when an MBA program or school is ranked.

It basically looks at the highest ROI achieved by graduates of major business schools after five years. It then ranks business schools by the highest average ROI of its graduates.

This ranking is sometimes referred to as the "Payback" ranking because it also shows the number of years it takes for a graduate to break even or recoup his/her investment. The tagline of the ranking is "Where your investment in an M.B.A. pays off the most."

It is probably a good idea to define ROI according to the Forbes MBA ranking. Return on Investments has two parts...the investment and the return. The investment is the cost of tuition plus the forgone income while in the MBA program. The return is the gain in compensation above and beyond the investment (after five years).

The simplified calculation would look something like this..."total 5-year compensation (after graduation)" minus (-) "cost of obtaining degree (tuition and forgone income)" equals (=) "ROI". It should be noted that ROI is before tax and adjusted for the time value of money.

This ROI number can be found for students that graduated five years before the ranking. Tally that number for each school's graduates for that year and you have an average (median) ROI number for that school. Then business schools can then be ranked from highest to lowest ROI.

An MBA usually costs alot of money and there is good reason to investigate the ROI. It is always good to ask "Is an MBA worth the investment?". This Forbes ranking helps to answer that question for 65+ major business schools.

If you are considering a major school for your MBA, it is worthwhile to look at the Forbes MBA ranking to help you determine the return and payback on your investment.