Utah Medical Products - WACC Analysis

Utah Medical Products (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Utah Medical Products's Analysis

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

WACC Analysis Information

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

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