Medtox Scientific - WACC Analysis

Medtox Scientific (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Medtox Scientific's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Medtox Scientific'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 Medtox Scientific uses a significant proportion of equity capital.