Cabot Microelectronics (Weighted Average Cost of Capital (WACC) Analysis)
Improve your investment analysis with by seeing the Cabot Microelectronics's Discounted Cash Flow analysis, Cabot Microelectronics's Warren Buffet analysis, and Cabot Microelectronics's Comparable Multiple analysis.
Helpful Information for Cabot Microelectronics's Analysis
What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Cabot Microelectronics'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 Cabot Microelectronics. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Cabot Microelectronics before they make value investing decisions. This WACC analysis is used in Cabot Microelectronics's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Cabot Microelectronics's company valuation.
WACC Analysis Information
1. The WACC (discount rate) calculation for Cabot Microelectronics uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Cabot Microelectronics over the long term. If there are any short-term differences between the industry WACC and Cabot Microelectronics's WACC (discount rate), then Cabot Microelectronics is more likely to revert to the industry WACC (discount rate) over the long term.
2. The WACC calculation uses the higher of Cabot Microelectronics'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 Cabot Microelectronics uses a significant proportion of equity capital.