Span-America Medical (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the Span-America Medical's Discounted Cash Flow analysis, Span-America Medical's Warren Buffet analysis, and Span-America Medical's Comparable Multiple analysis.
Helpful Information for Span-America Medical's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Span-America 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 Span-America Medical. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Span-America Medical before they make value investing decisions. This WACC analysis is used in Span-America Medical's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Span-America Medical's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Span-America Medical uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Span-America Medical over the long term. If there are any short-term differences between the industry WACC and Span-America Medical's WACC (discount rate), then Span-America Medical is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Span-America 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 Span-America Medical uses a significant proportion of equity capital.