Central European Distribution - WACC Analysis

Central European Distribution (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Central European Distribution's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Central European Distribution'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 Central European Distribution uses a significant proportion of equity capital.