Liberty Global - WACC Analysis

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



Helpful Information for Liberty Global's Analysis

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

WACC Analysis Information

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

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