As of today (2024-04-26), UTi Worldwide's weighted average cost of capital is 10.56%%. UTi Worldwide's ROIC % is 0.00% (calculated using TTM income statement data).
UTi Worldwide earns returns that do not match up to its cost of capital. It will destroy value as it grows.
*Note: The beta of this company cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.
For a comprehensive WACC calculation, please access the WACC Calculator.
UTi Worldwide WACC % Historical Data
The historical data trend for UTi Worldwide'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.
For the Integrated Freight & Logistics subindustry, UTi Worldwide'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.
UTi Worldwide's WACC % Distribution in the Transportation Industry
For the Transportation industry and Industrials sector, UTi Worldwide's WACC % distribution charts can be found below:
* The bar in red indicates where UTi Worldwide's WACC % falls into.
UTi Worldwide 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, UTi Worldwide's market capitalization (E) is $752.120 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 one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Oct. 2015, UTi Worldwide's latest one-year quarterly average Book Value of Debt (D) is $562.8738 Mil.
a) weight of equity = E / (E + D) = 752.120 / (752.120 + 562.8738) = 0.572
b) weight of debt = D / (E + D) = 562.8738 / (752.120 + 562.8738) = 0.428
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 4.669%. 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. UTi Worldwide's beta cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.
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 = 4.669% + 1 * 6% = 10.669%
3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Oct. 2015, UTi Worldwide's interest expense (positive number) was $58.612 Mil. Its total Book Value of Debt (D) is $562.8738 Mil.
Cost of Debt = 58.612 / 562.8738 = 10.413%.
4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = 13.351 / -229.766 = -5.81%, which is less than 0%. Therefore it's set to 0%.
UTi Worldwide'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)
=
0.572
*
10.669%
+
0.428
*
10.413%
*
(1 - 0%)
=
10.56%
* 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.
UTi Worldwide (NAS:UTIW) 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, UTi Worldwide's weighted average cost of capital is 10.56%%. UTi Worldwide's ROIC % is 0.00% (calculated using TTM income statement data).
UTi Worldwide earns returns that do not match up to its cost of capital. It will destroy value as it grows.
*Note: The beta of this company cannot be obtained because it has a price history shorter than 3 years. It will thus be set to 1 as default to calculate WACC.
Be Aware
1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.
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 the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
Related Terms
UTi Worldwide (UTi Worldwide) Business Description
UTi Worldwide Inc was incorporated in the British Virgin Islands on January 30, 1995 under the International Business Companies Act as an international business company and operates under the British Virgin Islands legislation governing corporations. The Company's segments include: Freight Forwarding and Contract Logistics and Distribution Segment. Freight Forwarding the Company do not own or operate aircraft or vessels and, consequently, contract with commercial carriers to arrange for the shipment of cargo. In Contract Logistics and Distribution Segment; provides services relating to value-added warehousing and the subsequent distribution of goods and materials in order to meet clients inventory needs and production or distribution schedules. The Company operates a network of freight forwarding offices and contract logistics and distribution centers in a total of 60 countries. In addition, it serves its clients in 100 additional countries through independent agent-owned offices. The Companys business is managed from main support offices located in Long Beach, California, and several other locations. The Companys primary services include air and ocean freight forwarding, contract logistics, customs brokerage, distribution, inbound logistics and truckload brokerage. It also provides other supply chain management services, including consulting, the coordination of purchase orders and customized management services. Through its supply chain planning and optimization services, it assists its clients in designing and implementing solutions that improve the predictability and visibility and reduce the overall costs of their supply chains. As a freight forwarder, it conducts business as an indirect carrier and occasionally as an authorized agent for an airline. It acts as an indirect carrier with respect to shipments of freight. It arranges for, and in many cases provides, pick-up and delivery service between the carrier and the location of the shipper or recipient. When it acts as an authorized agent for an airline or ocean carrier, it arranges for the transportation of individual shipments to the airline or ocean carrier. As part of its freight forwarding services, it provides customs brokerage services in the United States and other countries in which it operates. As part of its customs brokerage services, it prepares and files formal documentation required for clearance through customs agencies, obtain customs bonds, facilitate the payment of import duties on behalf of the importer, arrange for payment of collect freight charges, assist with determining and obtaining the commodity classifications for shipments and perform other related services. The Companys contract logistics services include receiving, deconsolidation and decontainerization, sorting, put away, consolidation, assembly, cargo loading and unloading, assembly of freight and protective packaging, warehousing services, order management, and customized distribution and
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
UTIW has been successfully added to your 