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Cirrus Logic WACC %

:6.63% (As of Today)
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As of today (2021-10-16), Cirrus Logic's weighted average cost of capital is 6.63%. Cirrus Logic's ROIC % is 17.11% (calculated using TTM income statement data). Cirrus Logic generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Cirrus Logic WACC % Historical Data

The historical data trend for Cirrus Logic's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Cirrus Logic Annual Data
Trend Mar12 Mar13 Mar14 Mar15 Mar16 Mar17 Mar18 Mar19 Mar20 Mar21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.86 4.20 9.12 8.82 7.49

Cirrus Logic Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.99 6.65 7.17 7.49 6.71

Competitive Comparison

For the Semiconductors subindustry, Cirrus Logic's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Cirrus Logic WACC % Distribution

For the Semiconductors industry and Technology sector, Cirrus Logic's WACC % distribution charts can be found below:

* The bar in red indicates where Cirrus Logic's WACC % falls into.



Cirrus Logic WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Cirrus Logic's market capitalization (E) is $4613.002 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2021, Cirrus Logic's latest two-year average Short-Term Debt & Capital Lease Obligation was $14.0765 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $128.5975 Mil. The total Book Value of Debt (D) is $142.674 Mil.
a) weight of equity = E / (E + D) = 4613.002 / (4613.002 + 142.674) = 0.97
b) weight of debt = D / (E + D) = 142.674 / (4613.002 + 142.674) = 0.03

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 1.59000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Cirrus Logic's beta is 0.87.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 1.59000000% + 0.87 * 6% = 6.81%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Mar. 2021, Cirrus Logic's interest expense (positive number) was $1.057 Mil. Its total Book Value of Debt (D) is $142.674 Mil.
Cost of Debt = 1.057 / 142.674 = 0.7408%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 11.695%.

Cirrus Logic's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.97*6.81%+0.03*0.7408%*(1 - 11.695%)
=6.63%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Cirrus Logic  (NAS:CRUS) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Cirrus Logic's weighted average cost of capital is 6.63%. Cirrus Logic's ROIC % is 17.11% (calculated using TTM income statement data). Cirrus Logic generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

Cirrus Logic Business Description

Cirrus Logic logo
Industry
Technology » Semiconductors NAICS : 334413 SIC : 3674
Traded in Other Exchanges
Address
800 West 6th Street, Austin, TX, USA, 78701
Cirrus Logic Inc is a provider of integrated circuits for audio and voice signal processing applications. The firm's products are organized into two streams: portable audio products, and non-portable audio and other products. These products include analog and mixed-signal components targeting mobile devices, smart homes, and applications in the automotive, energy, and industrial markets. Roughly half of the firm's revenue is generated in China, with the rest coming from the United States, Europe, South Korea, Japan, Taiwan, and countries across the world.
Executives
Baumgartner Jeffrey W officer: VP of R&D 800 W. 6TH STREET AUSTIN TX 78701
Lego Catherine P director 3787 WOODSIDE ROAD WOODSIDE CA 94062
Carter John C director 800 WEST 6TH STREET AUSTIN TX 78701
Forsyth John officer: President 800 W. 6TH STREET AUSTIN TX 78701
Hanford Deirdre director 700 EAST MIDDLEFIELD ROAD MOUNTAIN VIEW CA 9403
Tupman David J. director 1028 CHURCH ST. SAN FRANCISCO CA 94114
Schuele Alan R director C/O SEVIN ROSEN FUNDS 13455 NOEL RD #1670 DALLAS TX 75240
Dehne Timothy R director C/O NATIONAL INSTRUMENTS 11500 MOPAC BLDG B AUSTIN TX 78759
Davern Alexander M director C/O NATIONAL INSTRUMENTS 11500 MOPAC BLDG C AUSTIN TX 78759
Anderson Scott Arnold officer: Senior VP of Supply Chain 1303 E ALGONQUIN RD SCHAUMBURG IL 60196
Rhode Jason P director, officer: CEO 2901 VIA FORTUNA AUSTIN TX 78746
Fluke Bradley J officer: VP & GM, MEMS Division 400 W CESAR CHAVEZ AUSTIN TX 78701
Case Thurman K officer: VP & CFO C/O CIRUS LOGIC INC 2901 VIA FORTUNA AUSTIN TX 78746
Benson Jodee officer: VP & Chief Culture Office 2901 VIA FORTUNA AUSTIN TX 78746
Thomas Scott officer: SVP General Counsel & Corp C/O CIRRUS LOGIC INC 800 WEST 6TH STREET AUSTIN TX 78701

Cirrus Logic Headlines

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