MKS Instruments - WACC Analysis

MKS Instruments (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for MKS Instruments's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of MKS Instruments'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 MKS Instruments uses a significant proportion of equity capital.