Flushing Financial - WACC Analysis

Flushing Financial (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Flushing Financial's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Flushing Financial'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 Flushing Financial uses a significant proportion of equity capital.