UBS AG - WACC Analysis

UBS AG (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for UBS AG's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of UBS AG'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 UBS AG uses a significant proportion of equity capital.