Barrett Business Srvs - WACC Analysis

Barrett Business Srvs (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Barrett Business Srvs's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Barrett Business Srvs'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 Barrett Business Srvs uses a significant proportion of equity capital.