Subtitled “The Calm Before the Storm—Rising Profits and Deflated Values?” the 14th edition of the Cost of Capital Study from KPMG Germany examines, among other things, the impact of regulatory interventions, scarcity of resources as well as digitalization on business models, their performance (cash flows) and their risk (cost of capital) by industry sector. Survey respondents include 312 companies: 240 from Germany, 31 from Austria, and 41 from Switzerland. Some highlights:

• The average WACC across industries was 6.9%, the same level as in the past four years;
• After last year’s increase, the average risk-free rate remains nearly constant, at 1.2%;
• The average market risk premium remains stable, at 6.5%;
• The highest unlevered beta factors were applied by the automotive and technology sectors; and
• The average cost of debt increased slightly, to 2.9%.

The survey was conducted between March 2019 and July 2019. The reporting dates of the consolidated financial statements included in the study were between Feb. 28, 2018, and March 31, 2019.