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