Aviat Networks - WACC Analysis

Aviat Networks (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Aviat Networks's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Aviat Networks'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 Aviat Networks. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Aviat Networks before they make value investing decisions. This WACC analysis is used in Aviat Networks's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Aviat Networks's company valuation.

WACC Analysis Information

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

2. The WACC calculation uses the higher of Aviat Networks'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 Aviat Networks uses a significant proportion of equity capital.