The weighted average cost of financing is somewhat irrelevant unless it is compared to the return that a company earns on its assets.

Question

Quizplus · Accepted Answer

The weighted average cost of capital (WACC) is relevant in assessing a company's financial health and investment decisions when compared to the return on its assets, as it helps determine if the company is generating sufficient returns above its cost of financing.

The Weighted Average Cost of Financing Is Somewhat Irrelevant Unless