SXC Health - WACC Analysis

SXC Health (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for SXC Health's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of SXC Health'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 SXC Health uses a significant proportion of equity capital.