Vascular Solutions - WACC Analysis

Vascular Solutions (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Vascular Solutions's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Vascular Solutions'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 Vascular Solutions uses a significant proportion of equity capital.