IPC The Hospitalist - WACC Analysis

IPC The Hospitalist (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for IPC The Hospitalist's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of IPC The Hospitalist'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 IPC The Hospitalist uses a significant proportion of equity capital.