Zoll Medical - WACC Analysis

Zoll Medical (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Zoll Medical's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Zoll Medical'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 Zoll Medical uses a significant proportion of equity capital.