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