Tween Brands - WACC Analysis

Tween Brands (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Tween Brands's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Tween Brands'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 Tween Brands uses a significant proportion of equity capital.