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