OSI Systems - WACC Analysis

OSI Systems (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for OSI Systems's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of OSI Systems'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 OSI Systems uses a significant proportion of equity capital.