Beta Calculator

Beta, in financial terms, refers to the amount of risk associated with investing in a specific asset or portfolio compared to an investment in the broader stock market. It is a critical element in calculating the cost of equity, and in turn, the weighted average cost of capital. Potential lenders and investors will also utilize this metric to understand the amount of risk associated with your business and the total return they should expect on an investment to justify that risk.

To use the calculator below, input the data you’ve gathered including the average beta and debt-to-equity ratio of publicly traded companies, your company’s debt-to-equity ratio, and a tax rate assumption. The tax rate will default to 30% unless you provide an updated figure for your specific company. Once all the data is entered, click the Calculate Beta button to see your company’s beta.

In addition to the beta with the parameters you’ve entered, our calculator generates a sensitivity table detailing how the beta for your company changes with shifts in your debt-to-equity ratio. The sensitivity tables will help you understand an optimal capital structure, or project funding structure so you can make better investment and financing decisions.

Utilize this calculator in conjunction with our other free financial calculators to get a full understanding of your prospective business investments and strategies.