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