Emergent Biosolutions - WACC Analysis

Emergent Biosolutions (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Emergent Biosolutions's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Emergent Biosolutions'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 Emergent Biosolutions uses a significant proportion of equity capital.