Synovis Life Tech - WACC Analysis

Synovis Life Tech (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Synovis Life Tech's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Synovis Life Tech'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 Synovis Life Tech uses a significant proportion of equity capital.