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Journal articles on the topic 'Weighted Average Cost of Capital (WACC)'

Author: Grafiati

Published: 4 June 2021

Last updated: 25 July 2025

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1

Lobe, Sebastian. "Caveat WACC: Pitfalls in the use of the weighted average cost of capital." Corporate Ownership and Control 6, no. 3 (2009): 45–52. http://dx.doi.org/10.22495/cocv6i3p4.

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In Discounted Cash Flow valuations, the WACC approach is very popular. Therefore, knowing which limitations the concept inherits is essential. The objective of this paper is thus twofold: First, it is clarified that a constant WACC rate must fail if the implied leverage ratio is time-varying. This seems to be the rationale for defining a nonlinear WACC (NLWACC). However, the NLWACC appears to be rather artificial when allowing for time-varying WACCs. Second, although the NLWACC approach is further amplified in this paper, it must be emphasized that this approach is, even then, applicable only

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2

Wong, Matthew. "Managerial Decisions and the Weighted Average Cost of Capital." Journal of Finance Issues 6, no. 2 (2008): 95–104. http://dx.doi.org/10.58886/jfi.v6i2.2406.

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This paper explores the relationship between the weighted average cost of capital (WACC) of a company and its marginal cost of capital. We adopt the classic economic theory of production to shed light into the conditions upon which WACC can be safely treated as the marginal cost of a company. Any violations of these conditions will lead a company to reach suboptimal capital budgeting decisions.

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3

Yuliah, Yuliah, Leni Triana, Ina Khadijah, and Raden Irna Afriani. "CAPITAL COST ANALYSIS USING THE WEIGHTED AVERAGE COST OF CAPITAL (WACC) METHOD AT PT. KALBE FARMA TBK." International Journal of Multidisciplinary Research and Literature 2, no. 3 (2023): 342–46. http://dx.doi.org/10.53067/ijomral.v2i3.122.

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The cost of capital is a real cost that must be incurred by the company in obtaining funds from various sources. The cost of capital in this research uses the Weighted Average Cost of Capital (WACC) method which is the overall cost of the cost of capital and debt. This research was conducted at PT Kalbe Farma Tbk company for the 2018-2021 period. The WACC conditions for Tbk companies are optimal, in 2018-2020 the average weighted cost of capital has always decreased, 15.8%, 15.3%, 14.76%, 14.68% and experienced a non-significant increase of 0 .04%. A good WACC value is a value that provides th

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4

Mwanga, Winifrida, and Crispin John Mbogo. "Drivers of Weighted Average Cost of Capital in Selected Listed Companies in Tanzania." International Journal of Research and Innovation in Social Science VII, no. VII (2023): 1601–18. http://dx.doi.org/10.47772/ijriss.2023.70825.

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This study investigates drivers of the weighted average cost of capital (WACC) for the listed companies in Tanzania. Specifically, the study aimed to investigate the relationship between size of the firm and WACC of the selected listed companies in Tanzania, to examine how Profitability of the firm affects WACC of the selected listed companies in Tanzania, to analyze Growth rate impact on WACC of the selected listed companies in Tanzania and to examine how tangibility of the firm affects WACC of the selected listed companies in Tanzania. The study employed quantitative time series data coverin

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Edmundo, Lizarzaburu, Barriga Gabriela, Burneo Kurt, and Noriega Luis. "ANÁLISIS DEL COSTO DE CAPITAL EN MERCADOS EMERGENTES: EL CASO DE UNA CERVECERÍA PERUANA." Revista Científica Orbis, m 39 (año 13) (April 3, 2023): 62–76. https://doi.org/10.5281/zenodo.7795636.

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This paper addresses the calculation of the cost of capital for emerging market companies in the form of a case study. The main objective of this work is to provide a methodology to estimate the Weighted Average Cost of Capital (WACC), applying it to Backus S.A.A., a Peruvian brewery company. The case presents a brief industry description, the company’s background and operations, business and financial strategy and theoretical framework and analyses of the market value of the firm, financial distress, and WACC, assessing each component. Finally, the students are left with the task of cal

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Danielson, Morris G. "Tax Shields, the Weighted Average Cost of Capital, and the Appropriate Discount Rate for a Project with a Finite Useful Life." Journal of Risk and Financial Management 16, no. 9 (2023): 398. http://dx.doi.org/10.3390/jrfm16090398.

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The standard formulas for calculating the value of a firm’s tax shield and its weighted average cost of capital (WACC) use the assumption that the underlying cash flows are perpetuities. Yet, most projects will have a finite useful life. Because the perpetuity approach will overstate the value of a finite-life project’s tax shield, this factor will pressure the perpetuity-formula WACC to be less than the finite-life WACC. However, a large portion of the value of a perpetual tax shield can be attributed to interest payments during the next 5, 10, or 25 years, making it possible for the perpetui

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7

Vélez-Pareja, Ignacio, and Joseph Tham. "Market value calculation and the solution of circularity between value and the weighted average cost of capital WACC." RAM. Revista de Administração Mackenzie 10, no. 6 (2009): 101–31. http://dx.doi.org/10.1590/s1678-69712009000600007.

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Most finance textbooks present the Weighted Average Cost of Capital (WACC) calculation as: WACC = Kd×(1-T)×D% + Ke×E%, where Kd is the cost of debt before taxes, T is the tax rate, D% is the percentage of debt on total value, Ke is the cost of equity and E% is the percentage of equity on total value. All of them precise (but not with enough emphasis) that the values to calculate D% y E% are market values. Although they devote special space and thought to calculate Kd and Ke, little effort is made to the correct calculation of market values. This means that there are several points that are not

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Dobrowolski, Zbysław, Grzegorz Drozdowski, Mirela Panait, and Simona Andreea Apostu. "The Weighted Average Cost of Capital and Its Universality in Crisis Times: Evidence from the Energy Sector." Energies 15, no. 18 (2022): 6655. http://dx.doi.org/10.3390/en15186655.

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Recent economic anomalies, including the unprecedented lockdown generated by the COVID-19 crisis, have demonstrated that the weighted average cost of capital (WACC) remains an actual topic in the financial literature and in practice. Companies operate in an increasingly volatile environment, due to twin transitions and interlinked crises, and so they must have specific tools for measuring risk and profitability, in order to enable them to have a sound financial policy. Based on the earlier results obtained by Modigliani and Miller (1963), Harris and Pringle (1985), and Farber, Gillet, and Szaf

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9

Alihodžić, Almir. "Cost of capital: The effect to the firm value and profitability of companies: Evidence of a selected group of companies on the Sarajevo and Banja Luka stock exchanges." Bankarstvo 52, no. 1 (2023): 74–109. http://dx.doi.org/10.5937/bankarstvo2301092a.

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The weighted average cost of capital is the rate that companies must pay to shareholders and creditors. Therefore, it is a risk-adjusted discount rate for the company's cash flows. The paper will calculate the weighted average cost of capital for a selected group of companies listed on the Sarajevo and Banja Luka Stock Exchanges, as well as profitability indicators such as: ROA, ROE and net profit margin. Therefore, the main goal of this paper is to investigate whether there is interdependence in the movement of the weighted average cost of capital and profitability indicators of the selected

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10

Nurwulandari, Andini, Hasanudin Hasanudin, and Burhan Artardo. "STRATEGY FOR THE FORMATION OF OPTIMAL CAPITAL STRUCTURE WITH SWOT ANALYSIS IN PHARMACEUTICAL SUBSECTORS COMPANIES." JABE (Journal of Applied Business and Economic) 7, no. 3 (2021): 388. http://dx.doi.org/10.30998/jabe.v7i3.9840.

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<p><em>This study aims to determine the optimal capital structure formation in pharmaceutical sub-sector companies during the period 2014 - 2019 by analyzing profitability, dividend policy, and the SWOT matrix model by analyzing strengths, weaknesses, opportunities, and threats and being the basis for formulating various alternatives. These strategies can be carried out by company management. The company's profitability is not optimal; the company can still distribute dividends. And the results of the study illustrate that the capital structure of the pharmaceutical sub-sector comp

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Johnson, Dean, and Howard Qi. "WACC Misunderstandings." Journal of Finance Issues 6, no. 1 (2008): 32–40. http://dx.doi.org/10.58886/jfi.v6i1.2432.

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The Weighted Average Cost of Capital (WACC) has become a standard term and toot in finance. Given its broad acceptance and use, individuals are tempted to apply the WACC method without critically considering its theoretical foundation. Specifically, this study explains two common misunderstandings about the WACC method found in industry, literature and textbooks. First, decision makers view the WACC approach as valid only when the capital structure does not change. This is not a true restriction on the application of WACC. Second, many individuals and textbooks view WACC as the appropriate dis

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Cala Ibáñez, Geraldine, Erika Noriega Ardila, and Alfonso Enrique Gualdrón López. "El Impacto del WACC (Weighted Average Cost of Capital) en la valoración de empresas." Innovando En La U, no. 9 (December 1, 2017): 95–109. http://dx.doi.org/10.18041/2216-1236/innovando.9.2017.3898.

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El artículo se desarrolla en función de la importancia que tiene el impacto de los métodos para la valoración de empresas, tratando específicamente del WACC; por sus siglas en inglés: Weighted Average Cost of Capital (Promedio Ponderado del Costo de Capital), se ha planteado como interrogante, ¿Cuál es la importancia del WACC (Weighted Average Cost of Capital) en la valoración de empresas Implementando el tipo de investigación descriptivo y mediante la estructura de su fórmula, se pretende exponer la conexión que tienen los diferentes elementos que lo integran, así como la necesidad de identif

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Yusri, Dilla Sharina, Noriza Mohd Saad, and Zulkifli Mohamed. "Mapping the Landscape of Sukuk: A Bibliometric Analysis on Yields, Zakat Integration, and Weighted Average Cost of Capital." Advances in Business Research International Journal 10, no. 2 (2024): 84–97. https://doi.org/10.24191/abrij.v10i2.4645.

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This paper presents a bibliometric analysis on Zakat in Sukuk investments and the Weighted Average Cost of Capital (WACC) in Islamic finance. The study aims to identify the most influential works, authors, and institutions in the field, as well as emerging trends and research directions. The analysis is based on a comprehensive literature review of articles related to Zakat in Sukuk investments and WACC within Islamic finance contexts. Data was collected from the Scopus database, covering publications from the year 2012 to 2023. Specialized software tools like VOSviewer and Harzing Publish or

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14

Coelho Junior, Luiz Moreira, Amadeu Junior da Silva Fonseca, Roberto Castro, et al. "Empirical Evidence of the Cost of Capital under Risk Conditions for Thermoelectric Power Plants in Brazil." Energies 15, no. 12 (2022): 4313. http://dx.doi.org/10.3390/en15124313.

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This article analyzed the cost of capital under risk conditions for thermoelectric plants in Brazil, applying the Capital Asset Pricing Model—CAPM and the Weighted Average Capital Cost—WACC. To estimate the local CAPM, we used information from the Electric Energy Index—IEE of publicly traded companies in the electricity sector in Brazil and for the global CAPM, we observed the companies associated with the Edison Electric Institute—EEI, listed on the New York Stock Exchange—NYSE and at the National Association of Securities Dealers Automated Quotations—NASDAQ—USA. The risk conditions for capit

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AyuNingtyas, Jilma Dewi, and Pratomo Cahyo Kurniawan. "ANALISIS KINERJA KEUANGAN DENGAN PENDEKATAN ECONOMIC VALUE ADDED (EVA) PADA PERUSAHAAN YANG TERDAFTAR PADA JII TAHUN 2021." ECONBANK: Journal of Economics and Banking 4, no. 2 (2022): 98–104. http://dx.doi.org/10.35829/econbank.v4i2.56.

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This research will focus on analyzing the company's financial performance using the EVA approach on Islamic stocks indexed at JII in 2021. This research uses a descriptive quantitative approach with a population of financial statements of companies listed on the Jakarta Islamix Index (JII) in 2021. For analysis financial report data using the economic value added (EVA) approach, preceded by calculating the variables from EVA. The variables consist of NOPAT (net Operating after tax), Invested capital (invested capital), WACC (weighted average cost of capital), capital charger (cost of capital),

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Pirgaip, Burak, and Lamija Rizvić. "The Impact of Integrated Reporting on the Cost of Capital: Evidence from an Emerging Market." Journal of Risk and Financial Management 16, no. 7 (2023): 311. http://dx.doi.org/10.3390/jrfm16070311.

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The aim of this study is to investigate the influence of integrated reporting (IR) on the cost of financing within the Turkish capital market. Specifically, we analyze the effects of IR on the weighted average cost of capital (WACC), cost of equity (COE), and cost of debt (COD) for companies listed on Borsa Istanbul. Additionally, we explore how IR moderates the relationship between environmental, social, and governance (ESG) scores and the cost of financing. Our panel data analysis reveals a positive association between IR and both WACC and COD, while the impact on COE is not statistically si

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Pacheco Mexzon, Raimundo Renaun. "WACC y oportunidades de inversión." Pensamiento Crítico 19, no. 1 (2015): 123. http://dx.doi.org/10.15381/pc.v19i1.11024.

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Considerando que los grandes proyectos de inversión de una empresa se financian con un porcentaje de recursos propios y otro porcentaje con recursos de terceros vía deudas, surgió la inquietud de analizar en el período de 1999 al 2010 si una empresa peruana que cotiza en la Bolsa de Valores de Lima mejoró sus oportunidades de inversión. Para esto se determinó el comportamiento de su costo promedio ponderado de capital (WACC: Weighted Average Cost of Capital).

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18

Li, Baoyan. "Discussion on EVA Performance Evaluation Standard of Central Enterprise Based on WACC Valuation." SHS Web of Conferences 170 (2023): 03001. http://dx.doi.org/10.1051/shsconf/202317003001.

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Weighted average cost of capital (WACC) is a method of calculating a company's cost of capital by weighting the weight of each type of capital to the total source of capital.Economic Value Added (EVA) is the net operating profit after tax of an enterprise minus the opportunity cost of all invested capital including equity and debt. Given the "one-size-fits-all effect" of WACC in the evaluation of central enterprises' performance, this paper uses PetroChina as an example to verify whether there is an "inflated" or "overestimated" EVA in the evaluation of central enterprises' performance through

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19

Saeed, Pakdelan, Azarberahman Alireza, Akbari Sara, and Azarberahman Jalal. "Does Risk Disclosure Affect Firm's Cost of Capital?" International Journal of Management, Accounting and Economics 8, no. 11 (2022): 816–37. https://doi.org/10.5281/zenodo.5988549.

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Risk disclosure refers to providing information to the user to inform of any opportunities or threats .Theoretically, disclosure mainly aims to reduce the information asymmetry as well as investor uncertainty, thereby indirectly lowering the equity cost. An advantage of risk disclosure is its effectiveness in reducing the equity cost. Therefore, risk disclosure can help decrease investor uncertainty, thus diminishing the equity cost. This project mainly investigates the relationship between risk reporting and cost of capital in 174 firms listed on the Tehran Stock Exchange for the period 2012-

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20

Huang, Haocheng, Zecheng Liu, and Huan Zhao. "Research on Capital Structure and Investment Value of Supermarket Industry." Advances in Economics, Management and Political Sciences 41, no. 1 (2023): 34–40. http://dx.doi.org/10.54254/2754-1169/41/20232030.

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This paper focuses on researching the capital structure and investment value of the supermarket industry, specifically examining the impact of epidemiological events on value investment within this sector. The objective is to explore the factors that influence capital structure decisions and their implications for investment value. The analysis employs the Weighted Average Cost of Capital (WACC) method to evaluate the relationship between capital structure and investment performance in the context of the supermarket industry. The study aims to investigate the influence of epidemiological event

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Garcia, Carlos S., Jimmy Agustin Saravia Matus, and David A. Yepes. "The weighted average cost of capital over the lifecycle of the firm: Is the overinvestment problem of mature firms intensified by a higher WACC?" Corporate Board role duties and composition 12, no. 2 (2016): 96–103. http://dx.doi.org/10.22495/cbv12i2c1art4.

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Firm lifecycle theory predicts that the Weighted Average Cost of Capital (WACC) will tend to fall over the lifecycle of the firm (Mueller, 2003, p. 80-81). However, given that previous research finds that corporate governance deteriorates as firms get older (Mueller and Yun, 1998; Saravia, 2014) there is good reason to suspect that the opposite could be the case, that is, that the WACC is higher for older firms. Since our literature review indicates that no direct tests to clarify this question have been carried out up till now, this paper aims to fill the gap by testing this prediction empiri

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Franc-Dąbrowska, Justyna, Magdalena Mądra-Sawicka, and Anna Milewska. "Energy Sector Risk and Cost of Capital Assessment—Companies and Investors Perspective." Energies 14, no. 6 (2021): 1613. http://dx.doi.org/10.3390/en14061613.

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This paper aims to identify the costs of capital in a group of companies from the energy sector by including an investor and market risk approach. The study also concerns the company’s Weighted Average Cost of Capital (WACC) cost intra-industry analysis related to sector characteristics such as total assets, revenues, market capitalization, and companies’ age. In order to assess the intergroup relationships, basic correlation relationships were compared and a nonparametric test of variance was performed. The period under study covered the years 2015–2019. The conducted research evaluates group

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Natasha, Vivi, Fariza Hawa, Cholifatun Nisa, Safira P, and Maria Pandin. "Analisis Hubungan Antara Cost of Debt, Cost of Equity, dan Weighted Average Cost of Capital (WACC) dalam Keputusan Investasi." Jurnal Ekonomi, Manajemen, Akuntansi dan Keuangan 6, no. 3 (2025): 11. https://doi.org/10.53697/emak.v6i3.2646.

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Studi ini bertujuan mengkaji pengaruh cost of debt, cost of equity, dan weighted average cost of capital (WACC) terhadap keputusan investasi pada perusahaan manufaktur yang tercatat di Bursa Efek Indonesia (BEI). Dalam konteks pasar modal Indonesia yang memiliki kekhasan tersendiri, penelitian ini menekankan pentingnya memahami struktur modal ideal untuk menekan biaya pendanaan serta mendukung pengambilan keputusan investasi secara optimal, rasional, dan berkelanjutan. Struktur modal yang tepat memungkinkan perusahaan mencapai efisiensi finansial yang lebih tinggi dan menjaga daya saing jangka

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Grigoryev, V. V. "Specifics of the Discount Rate Calculaton in the Business Valuation." Economics, taxes & law 11, no. 3 (2018): 83–88. http://dx.doi.org/10.26794/1999-849x-2018-11-3-83-88.

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The paper examines two main methods of the discount rate calculation for business valuation: cumulative and weighted average capital cost (WACC), discloses the importance of business valuation for improving the business activity of a company, proposes the principles of the discount rate calculation, examines ways to determine additional risks in the implementation of the cumulative method, and analyzes the costs of the equity and borrowed capital in the implementation of the WACC method. The purpose of the research was to perform a comprehensive analysis of the methods for calculating cash flo

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Vélez-Pareja, Ignacio, Joseph Tham, and Viviana Fernández. "Adjustment of the WACC with Subsidized Debt in the Presence of Corporate Taxes: The Finite-Horizon Case." Estudios de Administración 12, no. 2 (2020): 45. http://dx.doi.org/10.5354/0719-0816.2005.56458.

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When discounting free-cash flows (FCF) at the Weighted Average Cost of Capital (WACC), we assume that the cost of debt is the market, unsubsidized rate. With debt at the market rate and perfect capital markets, debt only creates value in the presence of taxes through the tax shield. In some cases, the firm may be able to obtain a loan at a rate that is below the market rate. With subsidized debt and taxes, there would be a benefit to debt financing, and the unleveraged and leveraged values of the cash flows would differ. The benefit of lower tax savings are offset by the benefit of the subsidy

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Charisma, Bryan, and Encep Amir. "Economic Value-Added Creation by Optimizing Capital Structure in Project Finance." International Journal of Applied Research in Management and Economics 3, no. 2 (2020): 46–60. http://dx.doi.org/10.33422/ijarme.v3i2.446.

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Infrastructure Projects are large investment by the public and/or private sector that required enormous financial resource commitment to build physical asset and facilities needed for economic development so that the company need project financing to support with. Project finance is based on debt repayment from project companies’ revenue and not on the sponsors or the developer’s balance sheet, so the project companies should assure the cash flow is sufficient for debt repayment and dividend payment. Beside that investors still have to analyze the value created in that project with highest pos

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Angelopoulos, Dimitrios, Haris Doukas, John Psarras, and Giorgos Stamtsis. "Risk-based analysis and policy implications for renewable energy investments in Greece." Energy Policy 105, June 2017 (2017): 512–23. https://doi.org/10.1016/j.enpol.2017.02.048.

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Significant renewable energy (RE) investments have to be implemented in order to achieve the ambitious RE targets set in the EU for 2020 and beyond. Moreover, a great amount of capital has to be leveraged, as these projects are followed by high investment and financing costs. Main aim of this paper is the provision of a comprehensive assessment of the existing risk elements of RE investments in relation to the respective policies and the evaluation of their impact on the weighted average cost of capital (WACC) in Greece. A consultation procedure with key national energy stakeholders took also

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Zhao, Lanxin. "Analysis and Valuation of WiseTech Global Based on Combined CAPM and WACC Valuation." Advances in Economics, Management and Political Sciences 149, no. 1 (2025): 123–28. https://doi.org/10.54254/2754-1169/2024.19242.

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This paper provides a detailed analysis and valuation of WiseTech Global (WTC), a prominent growth firm in the Australian information technology industry, utilising the Capital Asset Pricing Model (CAPM) and the Weighted Average Cost of Capital (WACC). The research establishes WTCs classification as a growth firm based on quantitative and qualitative criteria, highlighting its exceptional performance metrics, including a compound annual growth rate (CAGR) significantly above its industry average. In addition, the CAPM model is applied to calculate the return on equity, while both the return on

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"Ser ISE impacta o WACC e o endividamento?" IOSR Journal of Business and Management 27, no. 7 (2025): 01–09. https://doi.org/10.9790/487x-2707010109.

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Background: This article aims to evaluate the impact of adherence to the Corporate Sustainability Index (ISE) on the weighted average cost of capital (WACC) and debt (DE) of Brazilian companies listed on B3 (Brasil, Bolsa, Balcão). Materials and Methods: Data were collected from 332 publicly traded non-financial Brazilian companies, 85 of which belonged to the ISE for at least one year, in the period from 2010 to 2023. A descriptive and quantitative research was developed, based on secondary data, which were subjected to robust OLS regressions using unbalanced panel data. Results: In the analy

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Fonseca, Amadeu Junior da Silva, Roberto Castro, Edvaldo Pereira Santos Júnior, et al. "Análise dos custos de capital para uma termoelétrica a óleo combustível no Nordeste brasileiro: uma aplicação do WACC e CAPM." International Journal of Scientific Management and Tourism 9, no. 3 (2023): 1713–26. http://dx.doi.org/10.55905/ijsmtv9n3-015.

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Este artigo analisou o custo de capital de uma usina termoelétrica a óleo combustível no nordeste brasileiro, aplicando o Capital Asset Pricing Model (CAPM) e o Weighted Average Capital Cost (WACC). Calculou o risco dos empreendimentos por meio da correlação entre os ativos de carteira com 18 empresas do Índice de Energia Elétrica (IEE), cotadas na B3 S.A. - Brasil, Bolsa, Balcão (B3). Inferiu a volatilidade do mercado sob as variáveis Beta alavancado; Beta não alavancado; Desvio padrão; Relação entre Dívida Líquida e Patrimônio Líquido (D/E); e Retorno médio dos ativos. Foi calculado o WACC l

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Brusov, Peter, and Tatiana Filatova. "Generalization of the Brusov–Filatova–Orekhova Theory for the Case of Variable Income." Mathematics 10, no. 19 (2022): 3661. http://dx.doi.org/10.3390/math10193661.

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To expand the applicability in practice of the modern theory of cost and capital structure, the theory of Brusov–Filatova–Orekhova (BFO), which is valid for companies of arbitrary age, is generalized for the case of variable income. The generalized theory of capital structure can be successfully applied in corporate finance, business valuation, banking, investments, ratings, etc. income. A generalized Brusov–Filatova–Orekhova formula for the weighted average cost of capital, WACC, is derived using a formula in MS Excel, where the role of the discount rate shifts from WACC to WACC–g (here g is

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Tawfiq, Tawfiq Taleb, Hala Tawaha, Asem Tahtamouni, and Nashat Ali Almasria. "The Influence of Environmental, Social, and Governance Disclosure on Capital Structure: An Investigation of Leverage and WACC." Journal of Risk and Financial Management 17, no. 12 (2024): 570. https://doi.org/10.3390/jrfm17120570.

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This paper seeks to examine the extent to which environmental, social, and governance (ESG) disclosure affects capital structure and cost of capital for non-financial Fortune 500 firms. With a sample period from 2007 to 2022 and a system (Generalized Method of Moments) GMM estimation method, we investigate the linkage between ESG disclosure scores and both leverage and the weighted average cost of capital (WACC). Thus, we find that firms with stronger ESG performance have higher ESG disclosure and lower leverage ratios and WACC, highlighting that firms with good ESG outcomes have better equity

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Gniadkowska - Szymańska, Agata, and Marzena Papiernik-Wojdera. "The relationship between the application of corporate sustainability policy and the weighted average cost of capital: examples of European countries." Scientific Papers of Silesian University of Technology. Organization and Management Series 2024, no. 202 (2024): 127–37. http://dx.doi.org/10.29119/1641-3466.2024.202.8.

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Purpose: This publication aims to verify whether Van Horne coefficient model affects company growth, as expressed by the WACC. Design/methodology/approach: The study was conducted on a group of nonfinancial companies listed on: the Warsaw Stock Exchange (WIG index), The Frankfurt Stock Exchange (DAX index), The Paris Stock Exchange (CAC index) and the Stockholm Stock Exchange (OMX Stockholm index) from 01/01/2000 - 31/12/2021. Van Horne's SGR model was used as an indicator of the sustainable growth of the firm. The analysis related to WACC and condition assessment of analysed companies is pres

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Brusov, P. N., T. V. Filatova, and V. L. Kulik. "Application of the Company’s “Golden Age” Effect in the Economic Practice." Finance: Theory and Practice 28, no. 3 (2024): 61–83. http://dx.doi.org/10.26794/2587-5671-2024-28-3-61-83.

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Taking into account the conditions of the real functioning of companies, one of the most striking effects in financial management is investigated: the “golden age” of the company (when the cost of capital raised is below the perpetuity limit, and the company’s value is higher). With this aim the dependence of cost of raising capital, WACC, on the age of company, n, is studied at various leverage levels, at various values of equity and debt costs, at different frequencies of tax on income payments, p, with advance payments of tax on income and payments at the end of periods, at variable income

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Arofah, Ulfa, Muhammad Saiful Hakim, and Muhammad Alfarizi. "Capital efficiency and organizational performance: A dynamic panel analysis of Weighted Average Cost of Capital (WACC) and ROA in Indonesia’s healthcare sector." Journal of Applied Sciences in Accounting, Finance, and Tax 8, no. 1 (2025): 26–40. https://doi.org/10.31940/jasafint.v8i1.26-40.

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The healthcare sector in Indonesia faces challenges in managing capital efficiency and organizational performance due to high operational costs and the need for continuous investment in health technology and infrastructure. As a key driver of economic growth, especially post-COVID-19, optimal capital management is crucial for sustaining operations and creating stakeholder value. This study examines the relationship between the Weighted Average Cost of Capital (WACC) and Return on Assets (ROA) in Indonesia’s healthcare sector using a quantitative dynamic panel analysis approach. Financial data

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VORONOV, Dmitrii S., Lyudmila A. RAMENSKAYA, and Ruslan A. DOLZHENKO. "Calculation of the discount rate for the Russian market in present-day conditions." Finance and Credit 29, no. 4 (2023): 795–839. http://dx.doi.org/10.24891/fc.29.4.795.

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Subject. This article focuses on the consideration of the algorithm and methodological approaches to assessing the cost of capital. Objectives. The article aims to develop a practical algorithm for assessing the cost of capital and calculating the discount rate based on ruble risk-free assets and Russian financial statistics. Methods. For the study, we used the Weighted Average Capital Cost (WACC) and Capital Asset Pricing (CAPM) models. Results. The article offers a tested step-by-step algorithm for calculating the cost of capital and risk premium loading to it using domestic financial statis

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Gelo, Tomislav, Željko Vrban, and Dalibor Pudić. "Allowed Revenue of Network System Operators in the Croatian Energy Sector and Interest Rate Changes on the Croatian Capital Market." Zagreb International Review of Economics and Business 22, s2 (2019): 73–91. http://dx.doi.org/10.2478/zireb-2019-0028.

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Abstract The energy sector is characterized by market and monopoly activities. Monopoly activities include network activities, transmission and distribution of electricity, and transport and distribution of natural gas. For this reason, the revenue of the network activities is defined as allowed income, and it is under the control of the national energy regulator. In Croatia, this is the Croatian Energy Regulatory Agency. The allowed revenues of the network system operator in the Croatian energy sector are defined by the methodologies for individual network activities, which are based on the m

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Mathye, Risimati Patrick, Miklas Scholz, and Stephen Nyende-Byakika. "Appraisal of Socio-Technical Water Loss Control Strategies Using Cost-Benefit Analysis in a Water Supply Network." Water 14, no. 11 (2022): 1789. http://dx.doi.org/10.3390/w14111789.

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The authors conducted a socio-technical cost–benefit analysis (CBA) in Alexandra Township (Alex for short) by combining three water loss control investment strategies: (i) pipeline and infrastructure upgrades, (ii) repair and maintenance, and (iii) socio-domestic retrofitting capital. The researchers performed the CBA using sensitivity analysis methodologies such as marginal cost of capital (MCC), weighted average cost of capital (WACC), coefficient of variance (CV), the net present value (NPV) ratio, and cumulative and total cost methods. The findings for socio-domestic retrofitting capital i

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Oberholzer, Merwe. "A Model To Estimate Firms Accounting-Based Performance: A Data Envelopment Approach." International Business & Economics Research Journal (IBER) 13, no. 6 (2014): 1301. http://dx.doi.org/10.19030/iber.v13i6.8921.

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The objective of the study was to follow a logical inductive approach to develop a Data Envelopment Analysis (DEA) model to estimate the relative technical efficiency of firms. The Du Pont analysis theory as conceptual framework was applied using primarily readily available accounting line-items as input and output variables. From an interpretive epistemological paradigm and analytical reasoning, a new DEA model was developed with Weighted Average Cost of Capital (WACC), leverage and expenditure as input variables and revenue, net profit and Earnings Before Interest, Tax, Depreciation and Amor

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Wang, Runjie. "Optimal Financing Strategy Based on Tax Shield Effects: A Case Study of Tesla." Advances in Economics, Management and Political Sciences 184, no. 1 (2025): 77–82. https://doi.org/10.54254/2754-1169/2025.bl23229.

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Traditional capital structure theories mostly focus on the idealized model of the tax shield effect, ignoring the financial distress costs and agency costs that may be caused by high debt ratios, resulting in significant differences between theory and practice. Therefore, combining actual enterprise data to explore how to balance the tax shield effect and implicit costs in the dynamic adjustment of capital structure has become an important topic in both theory and practice. This paper takes Tesla as a case to study the debt financing strategy based on the tax shield effect and its optimization

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Miao, Yishun, and Wen Zhong. "Capital Structure and Risk Profile Comparison of Pharma Leaders." Advances in Economics, Management and Political Sciences 110, no. 1 (2024): 107–13. http://dx.doi.org/10.54254/2754-1169/110/2024ed0082.

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The pharmaceutical industry is in the spotlight nowadays. The financial situation of the pharmaceutical industry has experienced a lot of ups and downs due to the COVID-19. Therefore, analyzing the financial data of the pharmaceutical industry becomes significant. This report looks at three headline companies in the pharmaceuticals industry, Pfizer, Johnson & Johnson and Amgen. By analyzing and comparing their D/E ratio, weighted average cost of capital (WACC) and business risk, this report explores the reasons for the differences in the data of these three companies, forecasts the growth

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Aguilar, Victor, Freddy Naula, and Fanny Cabrera. "Cost of Capital in the Energy Sector, in Emerging Markets, the Case of a Dollarized Economy." Energies 17, no. 19 (2024): 4782. http://dx.doi.org/10.3390/en17194782.

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This article estimates the weighted average cost of capital (WACC) for the energy sector in Ecuador, a country with a dollarized economy and illiquid stock markets. Thus, reference companies in the region were taken, and at the same time combined with characteristics of national companies, establishing a useful methodology, which makes sense with the acceptable discount rates in the Ecuadorian economy. For the above, four estimation alternatives were used. In method one, the traditional WACC formula was applied using interest rates and risk premiums from the U.S. market, which resulted in an o

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Ahmad, Moh Safar, Hasanuddin Hasanuddin, Roydah Gani, and Anggita Permata Yakup. "Penerapan Economic Value Added Untuk Menilai Kinerja Keuangan." Journal Of Institution And Sharia Finance 6, no. 1 (2023): 55–65. http://dx.doi.org/10.24256/joins.v6i1.3866.

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This study aims to determine a healthy and efficient financial performance to gain profits and increase the company's performance index. This research was conducted by conducting data collection techniques using the financial ratios of PT. Asuransi Bina Dana Arta Tbk, used the ratio of Economic Value Added and measured by the formula Net Operating Profit After Tax (NOPAT), Capital Charges (CC), Weighted Average Cost of Capital (WACC), Invested Capital (IC). Obtained from the financial statements of PT Asuransi Bina Dana Arta Tbk. It can be concluded from the results of calculations that have b

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Kulikov, Andrey, Naief Alabed Alkader, Galina Panaedova, Aleksandr Ogorodnikov, and Evgenii Rebeka. "Modelling Optimal Capital Structure in Gas and Oil Sector by Applying Simulation Theory and Programming Language of Python (Qatar Gas Transport Company)." Energies 16, no. 10 (2023): 4067. http://dx.doi.org/10.3390/en16104067.

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The goal of this study is to optimize a company’s capital structure by modelling and programming the required equations in the components of weighted average cost of capital. This process will be carried out in the programming language Python, and then Monte Carlo simulation will be applied to increase the number of combinations of debt and equity in the capital structure and obtain more accurate results on the Qatar gas transport company. Throughout various scenarios and outcomes, the study seeks to determine the ideal capital structure that reduces both the firm’s weighted average cost of ca

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El-qawaqneh, Shahir, Dr Nur Hidayah Binti Laili, and Dr Khairil Bin Khairi. "The Approaching Lease Accounting Regulations and Its Impact on Cost of Capital, "A Practical Case Study"." Asian Journal of Finance & Accounting 7, no. 2 (2015): 201. http://dx.doi.org/10.5296/ajfa.v7i2.8493.

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<p>We examine how the approaching international lease accounting regulations influence credit rating of particular airfreight company, we capitalize all of still effective operation lease agreements commencing in 2002 and expired on 2026. In particular we use actual operation lease data, not only the disclosed with off-balance sheet. Our results suggest that, on average, capitalization of over 12 months term operation leases, dramatically alter capital structure. Results either reports a positive impact on weighted average cost of capital WACC, credit rating is a financial risk assessmen

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Markauskas, Mantas, and Asta Saboniene. "Evaluation of Capital Cost: Long Run Evidence from Manufacturing Sector." Engineering Economics 31, no. 2 (2020): 169–77. http://dx.doi.org/10.5755/j01.ee.31.2.21439.

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The article is directed to determine the most appropriate method for evaluating cost of capital of a manufacturing sector and, using the methodology, to perform a case study of Lithuanian manufacturing sector. For evaluation of cost of capital, calculation of Weighted Average Capital Cost was chosen, as literature analysis distinguished this method as the most widely accepted and used. Some changes were made to the methodology of WACC evaluation in order to adapt the method for countries, which do not contain liquid, mature financial markets, like using country’s credit ranking to assess risk

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Talwar, Shalini, and Anmol Garg. "ITC Limited: Decoding Business Segment Betas." Asian Case Research Journal 23, no. 02 (2019): 203–35. http://dx.doi.org/10.1142/s0218927519500081.

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OCV was seeking to improve its processes and enhance the skills of its analysts so as to provide valuable solutions for their clients in terms of the issues related to the profitability and risk of their existing business portfolios as well as the proposed new projects. A team was formed to evaluate if breaking down the weighted average cost of capital (WACC) to the divisional level could improve the quality of investment decisions by multi-division firms. ITC was chosen to analyse the entire process of breaking down WACC to the divisional level. The team had three distinct tasks to undertake.

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LANZIOTTI, Thaís Mattei, and Ricardo Letizia GARCIA. "Custo de capital das concessionárias de transmissão de energia elétrica no Brasil: um estudo da Companhia Estadual de Geração e Transmissão de Energia Elétrica - CEEE-GT." Revista Eletrônica Científica da UERGS 4, no. 2 (2018): 320–39. http://dx.doi.org/10.21674/2448-0479.42.320-339.

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O artigo tem como objetivo demonstrar que o Custo de Capital regulatório fixado pela Agência Nacional de Energia Elétrica – ANEEL para as empresas Transmissoras de Energia Elétrica no Brasil está aquém dos reais custos de oportunidade de capital próprio e de recursos oriundos de capital de terceiros necessários aos investimentos empregados no setor. Dessa forma, realizou-se uma análise do custo de capital atual da Companhia Estadual de Geração e Transmissão de Energia Elétrica – CEEE-GT, utilizando os mesmos parâmetros e metodologias de cálculo empregadas pelo Órgão Regulador, que consiste na

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Xu, Lehan. "Analysis of Four Capital Structure Theories and Financing Choice of Chinese-Listed Companies." Advances in Economics, Management and Political Sciences 22, no. 1 (2023): 215–19. http://dx.doi.org/10.54254/2754-1169/22/20230313.

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Controlling the capital structure is crucial to the financial management of the business. Maximizing the company's worth requires finding the appropriate capital structure. In this study, the relationship between corporate capital structure and corporate value is further investigated using the weighted average cost of capital (WACC) and capital asset pricing model (CAPM) analyses of four capital structure theories, including M&Ms First and Second Theories, the Trade-off Theory and the Pecking Order Theory, which examine the reasons why listed businesses' financing sequence conflicts with w

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Brusov, Peter, Tatiana Filatova, and Veniamin Kulik. "Two Types of Payments of Tax on Profit: Advanced Payments and at the End of Periods: Consideration within BFO Theory with Variable Profit." Journal of Risk and Financial Management 16, no. 3 (2023): 208. http://dx.doi.org/10.3390/jrfm16030208.

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Two modifications of a modern theory of capital structure—the Brusov–Filatova–Orekhova (BFO) theory—with variable income are considered: (1) with the income tax payments at the end of periods and (2) with advance income tax payments. BFO formulas for the WACC, and for company capitalization, V, were derived for these two cases. Using the obtained formulas, the dependence of the weighted average cost of capital, WACC; the discount rate; WACC–g (here, g, is the growth rate); company value, V; and the equity cost, ke, on the leverage level, L, at different values of g, at different values of the

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