Mediware Info Sys - WACC Analysis

Mediware Info Sys (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Mediware Info Sys's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Mediware Info Sys'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 Mediware Info Sys uses a significant proportion of equity capital.