Actions Semiconductor - WACC Analysis

Actions Semiconductor (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Actions Semiconductor's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Actions Semiconductor's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Actions Semiconductor. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Actions Semiconductor before they make value investing decisions. This WACC analysis is used in Actions Semiconductor's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Actions Semiconductor's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Actions Semiconductor uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Actions Semiconductor over the long term. If there are any short-term differences between the industry WACC and Actions Semiconductor's WACC (discount rate), then Actions Semiconductor is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Actions Semiconductor's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Actions Semiconductor uses a significant proportion of equity capital.