Beckman Coulter (Weighted Average Cost of Capital (WACC) Analysis)
Helpful Information for Beckman Coulter's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Beckman Coulter'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 Beckman Coulter. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Beckman Coulter before they make value investing decisions. This WACC analysis is used in Beckman Coulter's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Beckman Coulter's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Beckman Coulter uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Beckman Coulter over the long term. If there are any short-term differences between the industry WACC and Beckman Coulter's WACC (discount rate), then Beckman Coulter is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Beckman Coulter'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 Beckman Coulter uses a significant proportion of equity capital.