radiohas.blogg.se - Unlevered beta calculator

This can be calculated using the formula below:

The last step is to calculate the company's unlevered beta. We can calculate it using the formula below:ĭ/E ratio = total debt / total shareholders' equity Next, we need to calculate the company's debt-to-equity ratio, also known as the D/E ratio.

Calculate the debt-to-equity ratio ( D/E ratio ).

In our example, the equity beta for Company Alpha is 1.2.Īs corporate tax rate is applied to the pre-tax income, you can calculate it using the formula below:Ĭorporate tax rate = 1 - net income / pre-tax income Hence, to determine a company's equity beta, all you need to do is retrieve it from those websites. But worry not, most companies' equity betas are published by various financial data providers such as the Financial Times and Bloomberg. Performing a regression of the stock's return against the market returns is usually rather complicated and time-consuming.

Determine the levered beta / equity beta.Total shareholders' equity: $6,000,000 andĬalculating the unlevered beta requires four steps:.Let's take Company Alpha as an example to help us understand the calculation of the unlevered beta.Ĭompany Alpha reports the following information: