Harry Winston Diamond - WACC Analysis

Harry Winston Diamond (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Harry Winston Diamond's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Harry Winston Diamond'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 Harry Winston Diamond uses a significant proportion of equity capital.