Symmetry Medical - WACC Analysis

Symmetry Medical (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Symmetry Medical's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Symmetry Medical'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 Symmetry Medical uses a significant proportion of equity capital.