A company's blended cost of debt and equity financing.
WACC is used as the discount rate in DCF (discounted cash flow) valuations. ROIC > WACC means the company creates value; ROIC < WACC means it destroys value. WACC rises with interest rates, which is why higher rates compress equity valuations.
A company's blended cost of debt and equity financing. WACC is used as the discount rate in DCF (discounted cash flow) valuations. ROIC > WACC means the company creates value; ROIC < WACC means it destroys value. WACC rises with interest rates, which is why higher rates compress equity valuations.
In financial metrics, WACC (Weighted Average Cost of Capital) is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
WACC is used as the discount rate in DCF (discounted cash flow) valuations. ROIC > WACC means the company creates value; ROIC < WACC means it destroys value.
Looking for more financial terms?
Browse Full Glossary →