Video Display - WACC Analysis

Video Display (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Video Display's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Video Display'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 Video Display uses a significant proportion of equity capital.