Ecology and Environment - WACC Analysis

Ecology and Environment (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Ecology and Environment's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Ecology and Environment'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 Ecology and Environment uses a significant proportion of equity capital.