Consolidated Graphics - WACC Analysis

Consolidated Graphics (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Consolidated Graphics's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Consolidated Graphics'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 Consolidated Graphics uses a significant proportion of equity capital.