Matrixx Initiatives - WACC Analysis

Matrixx Initiatives (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Matrixx Initiatives's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Matrixx Initiatives'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 Matrixx Initiatives uses a significant proportion of equity capital.