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