Emergency Medical Srvs - WACC Analysis

Emergency Medical Srvs (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Emergency Medical Srvs's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Emergency Medical Srvs'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 Emergency Medical Srvs uses a significant proportion of equity capital.