Kubota Corp - WACC Analysis

Kubota Corp (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Kubota Corp's Analysis

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

WACC Analysis Information

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

2. The WACC calculation uses the higher of Kubota Corp'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 Kubota Corp uses a significant proportion of equity capital.