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Cost of Capital
Cost of Capital
8
min read
The weighted average cost of capital (WACC) in the IFRS impairment test according to IAS 36
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.
Peter Schmitz
July 14, 2024
Cost of Capital
8
min read
The discount rate in the IFRS impairment test (IAS 36)
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.
Peter Schmitz
July 11, 2024
Cost of Capital
5
min read
Cost of capital databases – an overview for auditors
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.
Peter Schmitz
July 11, 2024
Cost of Capital
min read
Is total beta an alternative in SME valuation?
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?
Peter Schmitz
Cost of Capital
5
min read
Size-Premium in the business valuation of SMEs
We explain the background, controversies and effects of risk premiums in the valuation of SMEs.
Peter Schmitz
March 5, 2020
Cost of Capital
7
min read
Insecure vs. secure tax shield
Errors related to the beta factors can be avoided by paying attention to whether the tax shield is safe or unsafe.
Peter Schmitz
Cost of Capital
9
min read
The tax shield in business valuation
In an ideal world, the capital structure plays no role in business valuation, at least if you follow the Modigliani-Miller theorem, which was developed in 1958 by economists Franco Modigliani and Merton Miller.
Peter Schmitz
Cost of Capital
6
min read
Raw beta vs. adjusted beta: Choosing the right beta factors in the CAPM
In the context of the Capital Asset Pricing Model (CAPM), beta represents the risk measure for systematic risk.
Peter Schmitz
March 1, 2020
Cost of Capital
4
min read
IDW S1: Present value equivalent uniform riskfree base rate
Against the backdrop of the persistently low interest rate environment, the IDW's Technical Committee for Business Valuation
Peter Schmitz
August 28, 2020
Cost of Capital
5
min read
Risk-free interest rate in business valuation
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.
Peter Schmitz
May 8, 2020
Cost of Capital
4
min read
Debt beta in business valuation
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).
Peter Schmitz
March 12, 2020
Cost of Capital
8
min read
Expertise on the beta factors
The beta factor is defined as a key performance indicator in finance and capital market theory. It assesses the systematic risk for the risk taker in a financial investment.
Peter Schmitz
April 16, 2019
4 min read
Federal Court of Justice
DCF processes
Income value method
Beta Factor Expertise
The beta factor is defined as a key figure in finance and capital market theory. It assesses the systematic risk for the risk bearer when investing or investing money. 
Peter Schmitz
April 16, 2019
2 min read
Diskontierungszinssatz
Evaluation parameters
Peer Group
CAPM
Risk Premiums 
Beta Factors
Expert knowledge discount rate
Discounting interest rate and cost of capital: Definition, calculation, IDW requirements
Peter Schmitz
Assessment practice
7 min read
Practical knowledge of company valuation
The company valuation determines the value of a company or its shares from the owners' point of view. The theoretical basis is described in detail in specialist literature. This article focuses on practical application issues.
Peter Schmitz
Evaluation parameters
Beta Factors
2 min read
Debt beta in company valuation
Debt beta is the result of the ratio of credit spread and market risk premium. If it is taken into account, the company value usually increases.
Peter Schmitz
March 12, 2020