MWI Veterinary Supply - WACC Analysis

MWI Veterinary Supply (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for MWI Veterinary Supply's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of MWI Veterinary Supply'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 MWI Veterinary Supply uses a significant proportion of equity capital.