World Fuel Services - WACC Analysis

World Fuel Services (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for World Fuel Services's Analysis

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

WACC Analysis Information

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

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