JDA Software - WACC Analysis

JDA Software (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for JDA Software's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of JDA Software'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 JDA Software uses a significant proportion of equity capital.