Hanger Orthopedic - WACC Analysis

Hanger Orthopedic (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Hanger Orthopedic's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Hanger Orthopedic'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 Hanger Orthopedic uses a significant proportion of equity capital.