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Take-Two Interactive Software (NAS:TTWO) WACC %

:9.52% (As of Today)
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As of today (2024-02-25), Take-Two Interactive Software's weighted average cost of capital is 9.52%%. Take-Two Interactive Software's ROIC % is -7.90% (calculated using TTM income statement data). Take-Two Interactive Software earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Take-Two Interactive Software WACC % Historical Data

The historical data trend for Take-Two Interactive Software's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Take-Two Interactive Software Annual Data
Trend Mar14 Mar15 Mar16 Mar17 Mar18 Mar19 Mar20 Mar21 Mar22 Mar23
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.32 3.36 4.30 5.23 8.89

Take-Two Interactive Software Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.14 8.89 9.63 9.97 9.31

Competitive Comparison

For the Electronic Gaming & Multimedia subindustry, Take-Two Interactive Software's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Take-Two Interactive Software WACC % Distribution

For the Interactive Media industry and Communication Services sector, Take-Two Interactive Software's WACC % distribution charts can be found below:

* The bar in red indicates where Take-Two Interactive Software's WACC % falls into.



Take-Two Interactive Software WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Take-Two Interactive Software's market capitalization (E) is $25760.254 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Dec. 2023, Take-Two Interactive Software's latest one-year quarterly average Book Value of Debt (D) is $3503.62 Mil.
a) weight of equity = E / (E + D) = 25760.254 / (25760.254 + 3503.62) = 0.8803
b) weight of debt = D / (E + D) = 3503.62 / (25760.254 + 3503.62) = 0.1197

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.248%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Take-Two Interactive Software's beta is 1.05.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.248% + 1.05 * 6% = 10.548%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Dec. 2023, Take-Two Interactive Software's interest expense (positive number) was $81 Mil. Its total Book Value of Debt (D) is $3503.62 Mil.
Cost of Debt = 81 / 3503.62 = 2.3119%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = -237.3 / -1688.8 = 14.05%.

Take-Two Interactive Software's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.8803*10.548%+0.1197*2.3119%*(1 - 14.05%)
=9.52%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Take-Two Interactive Software  (NAS:TTWO) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Take-Two Interactive Software's weighted average cost of capital is 9.52%%. Take-Two Interactive Software's ROIC % is -7.90% (calculated using TTM income statement data). Take-Two Interactive Software earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

Take-Two Interactive Software (NAS:TTWO) Business Description

Address
110 West 44th Street, New York, NY, USA, 10036
Found in 1993, Take-Two consists of three wholly owned labels, Rockstar Games, 2K, and Zynga. The firm is one of the world's largest independent video game publishers on consoles, PCs, smartphones, and tablets. Take-Two's franchise portfolio is headlined by "Grand Theft Auto" (345 million units sold) and contains other well-known titles such as "NBA 2K," "Civilization," "Borderlands," "Bioshock," and "Xcom." Zynga mobile titles include "Farmville," "Empires & Puzzles," and "CSR Racing.".
Executives
Daniel P Emerson officer: General Counsel 622 BROADWAY, NEW YORK NY 10012
Lainie Goldstein officer: Chief Financial Officer C/O TAKE-TWO INTERACTIVE SOFTWARE, INC., 622 BROADWAY, NEW YORK NY 10012
Laverne Evans Srinivasan director C/O TAKE-TWO INTERACTIVE SOFTWARE, INC., 622 BROADWAY, NEW YORK NY 10012
Strauss Zelnick director, officer: Executive Chairman C/O ZELNICKMEDIA, 650 FIFTH AVE 31ST FLOOR, NEW YORK NY 10019
Michael Sheresky director C/O WILLIAM MORRIS AGENCY, 1 WILLIAM MORRIS PLACE, BEVERLY HILLS CA 90212
Karl Slatoff officer: Executive Vice President C/O ZELNICKMEDIA CORPORATION, 19 WEST 44TH STREET, 18TH FLOOR, NEW YORK NY 10036
William B Gordon director
Ellen F Siminoff director 555 ELLIS STREET, MOUNTAIN VIEW CA 94043
Roland A Hernandez director 300 NORTH SAN RAFAEL AVE, PASADENA CA 91105
Paul E Viera director C/O TAKE-TWO INTERACTIVE SOFTWARE, INC., 110 WEST 44TH STREET, NEW YORK NY 10036
Michael Dornemann director 4950 COMMUNICATION AVENUE, SUITE 300, BOCA RATON FL 33431
Jon J Moses director C/O UGO NETWORKS, INC., 670 BROADWAY, NEW YORK NY 10012
Seth D Krauss officer: Exec VP and General Counsel C/O TAKE-TWO INTERACTIVE SOFTWARE, INC., 222 BROADWAY, NEW YORK NY 10012
Susan Tolson director C/O TAKE-TWO INTERACTIVE SOFTWARE, INC., 622 BROADWAY, NEW YORK NY 10019
Carl C Icahn 10 percent owner C/O ICAHN ENTERPRISES L.P., 16690 COLLINS AVE., PH-1, SUNNY ISLES BEACH FL 33160