Atwood Oceanics - WACC Analysis

Atwood Oceanics (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Atwood Oceanics's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Atwood Oceanics'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 Atwood Oceanics uses a significant proportion of equity capital.