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Invesco Seniorome Trust (NYSE:VVR) WACC %

:5.59% (As of Today)
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As of today (2022-11-28), Invesco Seniorome Trust's weighted average cost of capital is 5.59%. Invesco Seniorome Trust's ROIC % is 0.00% (calculated using TTM income statement data). Invesco Seniorome Trust earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Invesco Seniorome Trust (NYSE:VVR) WACC % Historical Data

The historical data trend for Invesco Seniorome Trust'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.

Invesco Seniorome Trust Annual Data
Trend Feb18 Feb19 Feb20 Feb21 Feb22
WACC % - 5.49 4.31 0.81 4.98

Invesco Seniorome Trust Semi-Annual Data
Aug17 Feb18 Aug18 Feb19 Aug19 Feb20 Aug20 Feb21 Aug21 Feb22 Aug22
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - 0.81 - 4.98 -

Invesco Seniorome Trust (NYSE:VVR) WACC % Competitive Comparison

For the Asset Management subindustry, Invesco Seniorome Trust'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.

   

Invesco Seniorome Trust (NYSE:VVR) WACC % Distribution

For the Asset Management industry and Financial Services sector, Invesco Seniorome Trust's WACC % distribution charts can be found below:

* The bar in red indicates where Invesco Seniorome Trust's WACC % falls into.



Invesco Seniorome Trust 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, Invesco Seniorome Trust's market capitalization (E) is $592.228 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 Aug. 2022, Invesco Seniorome Trust's latest two-year average Short-Term Debt & Capital Lease Obligation was $0 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $191.75 Mil. The total Book Value of Debt (D) is $191.75 Mil.
a) weight of equity = E / (E + D) = 592.228 / (592.228 + 191.75) = 0.7554
b) weight of debt = D / (E + D) = 191.75 / (592.228 + 191.75) = 0.2446

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 3.67900000%. 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. Invesco Seniorome Trust's beta is 0.50.
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 = 3.67900000% + 0.50 * 6% = 6.679%

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 Feb. 2022, Invesco Seniorome Trust's interest expense (positive number) was $4.247 Mil. Its total Book Value of Debt (D) is $191.75 Mil.
Cost of Debt = 4.247 / 191.75 = 2.2149%.

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 0%.

Invesco Seniorome Trust'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)
=0.7554*6.679%+0.2446*2.2149%*(1 - 0%)
=5.59%

* 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.


Invesco Seniorome Trust  (NYSE:VVR) 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, Invesco Seniorome Trust's weighted average cost of capital is 5.59%. Invesco Seniorome Trust's ROIC % is 0.00% (calculated using TTM income statement data). Invesco Seniorome Trust earns returns that do not match up to its cost of capital. It will destroy value as it grows.


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

Invesco Seniorome Trust (NYSE:VVR) Business Description

Invesco Seniorome Trust logo
Traded in Other Exchanges
N/A
Address
1555 Peachtree Street, N.E., Suite 1800, Atlanta, GA, USA, 30309
Invesco Senior Income Trust is a diversified, closed-end management investment company. The investment objective of the company is to provide a high level of current income, consistent with the preservation of capital. The company invests primarily in a portfolio of interests in floating or variable senior loans to corporations, partnerships, and other entities which operate in a variety of industries and geographic regions. It invests in various sectors such as business equipment and services, telecommunications, cable and satellite television, healthcare, chemicals and plastics, utilities, lodging and casinos, and others.
Executives
Vacheron Terry officer: Chief Financial Officer 1555 PEACHTREE ST. NE SUITE 1800 ATLANTA GA 30309
Bordewick James R Jr officer: Senior Officer & SVP C/O BANC OF AMERICA INVESTMENT ADVISORS 100 FEDERAL STREET BOSTON MA 02110
Reina Antonio officer: Secretary 1555 PEACHTREE STREET NE SUITE 1800 ATLANTA GA 30309
Levit Josh E officer: Chief Compliance Officer 1555 PEACHTREE STREET NE SUITE 1800 ATLANTA GA 30309
Deberghes Adrien officer: Vice President,PFO & Treasurer 1555 PEACHTREE STREET NE SUITE 1800 ATLANTA GA 30309
Waldron Haley S officer: Chief Accounting Officer 1555 PEACHTREE STREET NE SUITE 1800 ATLANTA GA 30309
Dukes Laura Allison officer: SMD and CFO 780 JOHNSON FERRY ROAD SUITE 800 ATLANTA GA 30342
Mcaleer Tara officer: Chief Compliance Officer 1555 PEACHTREE STREET NE ATLANTA GA 30309
Starr Loren M director
Swanson Stephen William officer: Secretary and General Counsel 1555 PEACHTREE STREET NE ATLANTA GA 30309
Lege Annette director, officer: CFO & CAO 1555 PEACHTREE ST. NE SUITE 1800 ATLANTA GA 30309
Carome Kevin M director
Drobny Robert Phillip officer: Vice President 1555 PEACHTREE STREET NE ATLANTA GA 30309
Gregson Mark William officer: Controller & Treasurer 1555 PEACHTREE STREET NE ATLANTA GA 30309
Kuehl Todd F officer: Chief Compliance officer 1555 PEACHTREE STREET NE ATLANTA GA 30309
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