Debt beta is a measure of the sensitivity of equity to changes in debt financing and is derived from the ratio of the credit spread to the equity risk premium. It serves as an indicator of systematic risk as defined by the Capital Asset Pricing Model (CAPM).

The risk-free interest rate corresponds to the return on a capital investment that is not subject to default risk. In addition to the default risk, the term and the currency are further characteristics that determine the level of this so-called riskfree base rate.

Against the backdrop of the persistently low interest rate environment, the IDW's Technical Committee for Business Valuation

In the context of the Capital Asset Pricing Model (CAPM), beta represents the risk measure for systematic risk.

Errors related to the beta factors can be avoided by paying attention to whether the tax shield is safe or unsafe.

We explain the background, controversies and effects of risk premiums in the valuation of SMEs.

The total beta of a company is an extended version of the beta coefficient and takes into account not only the systematic risk of the company but also the financial risk. Is this a useful key figure for SMEs?

Auditors who want to produce a reliable business valuation, including the cost of capital and beta factors, need a large amount of valid data. To obtain this data, it is useful to access special databases. There is a wide range of databases available, from the USA to Europe, and from those that are free of charge to those that are not.

The impairment test for assets under IFRS is governed by IAS 36. The aim is to ensure that the assets of a company are not recognized in the balance sheet at a value higher than their recoverable amount. This article explains why goodwill is often the focus of the impairment test and why a discount rate is almost always required.

The weighted average cost of capital (WACC) is the most commonly used discount rate in the IFRS impairment test. This article explains the special features to be considered when determining the WACC and the difference between the WACC in business valuation.

Determining the cost of capital is one of the regular tasks of auditors when carrying out business valuations. They are needed to determine the current value of a company, but also to allocate purchase prices to individual assets, carry out impairment tests or value brands. In this article, we explain how the cost of capital is made up, how to determine the weighted average cost of capital (WACC), which use cases regularly occur in practice and which errors should be avoided when determining the cost of capital.