Albany Molecular Research - WACC Analysis

Albany Molecular Research (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Albany Molecular Research's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Albany Molecular Research'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 Albany Molecular Research uses a significant proportion of equity capital.