Vasco Data Security - WACC Analysis

Vasco Data Security (Weighted Average Cost of Capital (WACC) Analysis)

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Helpful Information for Vasco Data Security's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Vasco Data Security'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 Vasco Data Security uses a significant proportion of equity capital.