What must a company do in order to be profitable according to high WACC?

A company must generate returns that exceed its Weighted Average Cost of Capital (WACC) in order to be profitable. WACC represents the average rate that a company is expected to pay to finance its assets, which includes the costs of equity and debt. When WACC is high, it indicates that the company has a significant cost of financing, meaning its investments must generate higher returns just to cover these costs.

Overcoming borrowing costs is crucial because if the returns generated from investments are below the WACC, the company is essentially losing value. It must achieve returns that not only cover these costs but also provide residual profits to shareholders. Thus, in a scenario where WACC is high, a company's focus should be on ensuring that its projects and investments are yielding returns sufficient to not only meet but exceed this cost of capital.

Generating revenue quickly, minimizing asset growth, and reducing liabilities do not directly address the need to meet or beat the cost of capital associated with funding sources. While these actions may improve overall financial health, they are not effective strategies to specifically address the challenge posed by a high WACC, which fundamentally emphasizes the importance of return on investment relative to financing costs.