ModusLink Global - WACC Analysis

ModusLink Global (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for ModusLink Global's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of ModusLink Global'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 ModusLink Global uses a significant proportion of equity capital.