Kenneth Cole - WACC Analysis

Kenneth Cole (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Kenneth Cole's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Kenneth Cole'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 Kenneth Cole uses a significant proportion of equity capital.