Marathon Oil (Weighted Average Cost of Capital (WACC) Analysis)
 Improve your investment analysis with by seeing the Marathon Oil's Discounted Cash Flow analysis, Marathon Oil's Warren Buffet analysis, and Marathon Oil's Comparable Multiple analysis.  Helpful Information for Marathon Oil's AnalysisWhat is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Marathon Oil'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 Marathon Oil. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Marathon Oil before they make value investing decisions. This WACC analysis is used in Marathon Oil's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Marathon Oil's company valuation. |
WACC Analysis Information1. The WACC (discount rate) calculation for Marathon Oil uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Marathon Oil over the long term. If there are any short-term differences between the industry WACC and Marathon Oil's WACC (discount rate), then Marathon Oil is more likely to revert to the industry WACC (discount rate) over the long term. 2. The WACC calculation uses the higher of Marathon Oil'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 Marathon Oil uses a significant proportion of equity capital. |