Columbus McKinnon - WACC Analysis

Columbus McKinnon (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Columbus McKinnon's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Columbus McKinnon'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 Columbus McKinnon uses a significant proportion of equity capital.