Advanced Analogic Tech - WACC Analysis

Advanced Analogic Tech (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Advanced Analogic Tech's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Advanced Analogic Tech'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 Advanced Analogic Tech uses a significant proportion of equity capital.