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United Parcel Service Inc. (UPS)

Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate

Free Cash Flow to The Firm (FCFF)
Interest Paid, Net of Tax
EV to FCFF Ratio, Current
EV to FCFF Ratio, Historical

Free Cash Flow to The Firm (FCFF)

United Parcel Service Inc., FCFF calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net income
	Net noncash charges
	Changes in assets and liabilities, net of effects of business acquisitions
	Net cash from operating activities
	Cash paid during the period for interest, net of amount capitalized, net of tax¹
	Capitalized interest, net of tax²
	Capital expenditures
	Proceeds from disposals of property, plant and equipment
	Free cash flow to the firm (FCFF)

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

^{1, 2} See Details »

Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the United Parcel Service Inc.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	United Parcel Service Inc.’s FCFF declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Interest Paid, Net of Tax

United Parcel Service Inc., interest paid, net of tax calculation

USD $ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Effective Income Tax Rate (EITR)

	EITR¹
	Interest Paid, Net of Tax
	Cash paid during the period for interest, net of amount capitalized, before tax
	Less: Cash paid during the period for interest, net of amount capitalized, tax²
	Cash paid during the period for interest, net of amount capitalized, net of tax
	Interest Costs Capitalized, Net of Tax
	Capitalized interest, before tax
	Less: Capitalized interest, tax³
	Capitalized interest, net of tax

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

¹ See Details »

2018 Calculations

² Cash paid during the period for interest, net of amount capitalized, tax = Cash paid during the period for interest, net of amount capitalized × EITR
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³ Capitalized interest, tax = Capitalized interest × EITR
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Enterprise Value to FCFF Ratio, Current

United Parcel Service Inc., current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (USD $ in millions)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors
CSX Corp.
FedEx Corp.
Union Pacific Corp.
EV/FCFF, Sector
Industrial Transportation
EV/FCFF, Industry
Industrials

Based on: 10-K (filing date: 2019-02-21).

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Enterprise Value to FCFF Ratio, Historical

United Parcel Service Inc., historical EV/FCFF calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Enterprise value (EV)¹
	Free cash flow to the firm (FCFF)²
	Ratio
	EV/FCFF³
	Benchmarks
	EV/FCFF, Competitors
	CSX Corp.
	FedEx Corp.
	Union Pacific Corp.
	EV/FCFF, Sector
	Industrial Transportation
	EV/FCFF, Industry
	Industrials

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

¹ See Details »

² See Details »

2018 Calculations

³ EV/FCFF = EV ÷ FCFF
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Ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	United Parcel Service Inc.’s EV/FCFF ratio declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

	United Parcel Service Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality