Wolverine World Wide - WACC Analysis

Wolverine World Wide (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Wolverine World Wide's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Wolverine World Wide'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 Wolverine World Wide uses a significant proportion of equity capital.