DFC Global - WACC Analysis

DFC Global (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for DFC Global's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of DFC Global'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 DFC Global uses a significant proportion of equity capital.