Yanzhou Coal Mining - WACC Analysis

Yanzhou Coal Mining (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Yanzhou Coal Mining's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Yanzhou Coal Mining'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 Yanzhou Coal Mining uses a significant proportion of equity capital.