Bioanalytical Systems - WACC Analysis

Bioanalytical Systems (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Bioanalytical Systems's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Bioanalytical Systems's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Bioanalytical Systems. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Bioanalytical Systems before they make value investing decisions. This WACC analysis is used in Bioanalytical Systems's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Bioanalytical Systems's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Bioanalytical Systems uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Bioanalytical Systems over the long term. If there are any short-term differences between the industry WACC and Bioanalytical Systems's WACC (discount rate), then Bioanalytical Systems is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Bioanalytical Systems's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Bioanalytical Systems uses a significant proportion of equity capital.