CBIZ Inc. - WACC Analysis

CBIZ Inc. (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for CBIZ Inc.'s Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine CBIZ Inc.'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 CBIZ Inc.. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in CBIZ Inc. before they make value investing decisions. This WACC analysis is used in CBIZ Inc.'s discounted cash flow (DCF) valuation and see how the WACC calculation affect's CBIZ Inc.'s company valuation.

WACC Analysis Information

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

2. The WACC calculation uses the higher of CBIZ Inc.'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 CBIZ Inc. uses a significant proportion of equity capital.