FedEx Financial Statements and Financial Ratios Analyzed

FedEx: Brief Summary

FedEx (FDX) is a global courier and delivery services company headquartered in Memphis, Tennessee. It operates in the integrated freight and logistics industry, primarily serving the industrial sector. With approximately 500,000 full-time employees, FedEx is one of the largest employers in the transportation and logistics industry. The company offers various services, including express delivery, ground transportation, freight forwarding, and e-commerce solutions. FedEx operates an extensive network of distribution centers, hubs, and delivery vehicles, enabling efficient and reliable transportation of packages and goods worldwide. Known for its distinctive purple and orange branding, FedEx has established itself as a leader in the logistics industry, providing reliable and timely delivery services to businesses and consumers globally.

From a financial perspective, FedEx Corporation currently has a market cap of $41.2 billion.  Their stock price for the last 52 weeks has ranged from $88.69 to $178.50.  As for dividends, the organization pays quarterly dividends and a dividend yield of 1.64%.  His current beta is 1.33.  This indicates that the organization’s stock is slightly to moderately riskier than the overall market.

FedEx Financial Report Sources

“FedEx 2022 Company Analysis… For Beginners: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by Paul Borosky, MBA., and owner of Quality Business Plan.  In this report, I used FedEx's 2022 10k, 2017 10k annual report, 2016 10k annual report, 2018 10k annual report, and 2019 10k annual report as the basis for information gathering. 

Section 1: FedEx Income Statement Analyzed

In this section, I walk through a broad definition of what an income statement is and why it is essential.  I then discuss and define income statement line items, such as revenues, gross profits, etc., in detail.  After each line item is defined and discussed, I finally summarize FedEx's significant income statement line item trends in most cases.

Importance of Understanding FedEx’s Income Statement for Financial Analysis

Understanding FedEx's income statement is crucial for conducting a comprehensive company financial analysis. The income statement provides valuable insights into the company's revenue, expenses, and profitability, allowing investors, analysts, and stakeholders to evaluate its financial performance and make informed decisions. By analyzing FedEx's revenue figures, one can assess its ability to generate income from its core operations, such as package delivery and logistics services. Revenue growth trends can indicate market demand, customer retention, and competitive positioning.

Examining Cost Structure and Efficiency: Analyzing Expense Categories in FedEx's Income Statement

Examining the various expense categories in the income statement, such as operating, fuel, and labor expenses, helps stakeholders understand the company's cost structure and efficiency. It enables the evaluation of cost management strategies and potential risks to profitability. Profitability ratios, such as gross and net profit margins derived from the income statement, provide insights into FedEx's ability to generate profits and control costs. These ratios allow for comparisons with industry peers and historical performance.

Additionally, the income statement facilitates trend analysis by comparing financial data over different periods. This helps identify growth patterns, cost fluctuations, and potential risks or opportunities. Understanding FedEx's income statement enables stakeholders to assess its revenue generation, expense management, and profitability, aiding in investment decisions, performance evaluation, and strategic planning.

FedEx: Revenue Growth.

FedEx’s revenues were $65.4 billion in 2018.  In 2022, the organization’s revenues increased to $93.5 billion.  In the last five years, the average growth rate annually for the organization was 9.6%.  From my experience, this growth rate is above average for most multinational organizations.  This growth trend indicates the organization is continually taking steps to increase market share for the firm.  From an investor’s perspective, this is a good trend.

Analyst Grade: A

FedEx 2022 Summary Income Statement
Column1	2022	2021	2020	2019	2018
Revenues	93,512	83,959	69,217	69,693	65,450
COGS	37,317	32,039	27,227	26,737	22,017
Gross Profit		51,920	41,990	42,956	43,433
SG&A	32,058	30,173	25,031	24,776	23,795
Depreciation	3,970	3,793	3,615	3,353	3,095
R & D	-	-	-	-	-
Other				-	-
Total Operating Expenses	87,267	78,102	66,800	65,227	61,178
EBIT	6,245	5,857	2,417	4,466	4,272
Other Income
Interest Expense	689	793	672	588	558
EBT	4,896	6,674	1,669	655	4,353
Taxes	1,070	1,443	383	115	(219)
Net Income	3,826	5,231	1,286	540	4,572

 

Section 2: FedEx Balance Sheet Analyzed

For the FedEx balance sheet, I again go through each vital line item from the balance sheet.  In reviewing each line item, I will define their balance sheets line items, such as cash, property, plant and equipment, and liabilities.  Next, I then offer a summary analysis of their important balance sheet line items.

Importance of Understanding FedEx’s Balance Sheet for Financial Analysis

Understanding FedEx's balance sheet is crucial for financial analysis as it provides key insights into the company's financial health and stability. The balance sheet presents a snapshot of FedEx's assets, liabilities, and shareholder's equity at a given time, allowing analysts to evaluate its liquidity, leverage, and overall financial position. Analysts can assess the company's solvency and ability to meet its short-term and long-term obligations by examining the balance sheet. The composition of assets and liabilities provides information on FedEx's capital structure, debt levels, and funding sources. This knowledge aids in evaluating the company's risk profile and capacity to generate future cash flows.

Furthermore, the balance sheet helps analyze FedEx's efficiency in managing its assets and liabilities. Key metrics like the current ratio, debt-to-equity ratio, and return on assets can be derived from the balance sheet, providing valuable insights into the company's operational effectiveness and financial performance. A comprehensive understanding of FedEx's balance sheet allows for a thorough financial analysis, enabling investors, creditors, and stakeholders to make informed decisions about the company's prospects, stability, and valuation.

FedEx: Cash

FedEx’s cash holding was $3.2 billion in 2018 or 5% of sales.  In 2022, the organization’s cash holdings would increase to $6.8 billion or 7.4% of sales.  This trend indicates that the company has more cash than sales year-over-year.  From an investor’s perspective, this is not a good trend.  A better trend would be for the organization to have a steady cash position than sales. 

Analyst Grade: B

 

FedEx 2022 Summary Balance Sheet
Column1	2022	2021	2020	2019	2018
Cash	6,897	7,087	4,881	2,319	3,265
Short Term Investment	-	-	-	-	-
Account Receivable	11,863	7,087	4,881	9,116	8,481
Inventory	637	587	572	553	525
Other
Current Assets	20,365	20,580	16,383	13,086	13,341
Net PPE	38,091	35,752	33,608	30,429	28,154
Goodwill	6,544	6,992	6,372	6,884	6,973
Other
Total Assets	85,994	82,777	73,537	54,403	52,330
Accounts Payable	4,030	3,841	3,269	3,030	2,977
Accrued Expense	2,531	2,903	1,569	3,278	3,131
Accrued Taxes
Notes Payable
LT Debt - Current	82	146	51	964	1,342
Other
Total Current Liabilities	14,274	13,660	10,344	9,013	9,627
LT Debt	20,182	20,733	21,952	16,617	15,243
Other
Total Liabilities	61,055	58,609	55,242	36,646	32,914
Common Stock	3,744	3,513	3,388	3,231	3,117
Treasury	10,484	8,430	9,162	9,289	7,978
Retained Earnings	32,782	29,817	25,216	24,648	24,823
Other
Total Equity	24,939	24,168	18,295	17,757	19,416
Total Equity & Liability	85,994	82,777	73,537	54,403	52,330

Section 3: FedEx Financial Ratios Analyzed

I have chosen several different financial ratios for this section to review for FedEx.  In reviewing each of their financial ratios, I first start by defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of their important Financial ratios. 

Importance of Understanding FedEx’s Financial Ratios for Financial Analysis

Understanding FedEx's financial ratios is crucial for financial analysis as they provide a deeper understanding of the company's performance, efficiency, and profitability. Financial ratios allow analysts to compare aspects of FedEx's financial statements, facilitating meaningful insights and informed decision-making. Ratios such as liquidity ratios (e.g., current ratio, quick ratio) help assess FedEx's ability to meet short-term obligations and manage its working capital effectively. These ratios indicate the company's liquidity position and its capacity to handle unexpected financial challenges.

Unveiling FedEx's Profitability and Return: Insights from Financial Ratio Analysis

Profitability ratios (e.g., gross profit margin, net profit margin) shed light on FedEx's ability to generate profits from its operations. These ratios provide insights into the company's pricing strategy, cost management, and profitability. Additionally, financial ratios such as return on assets (ROA), return on equity (ROE), and return on investment (ROI) measure FedEx's ability to generate returns for its shareholders and investors. These ratios indicate the company's efficiency in utilizing its assets to generate profits and create value.

Analysts can identify trends, strengths, and areas of improvement within FedEx's financial performance by analyzing these financial ratios over time and comparing them to industry benchmarks or competitors. This information is valuable for investors, stakeholders, and management to assess the company's financial health, make investment decisions, and formulate strategies for growth and sustainability.

FedEx Current Ratio.

FedEx’s current ratio was 1.39 in 2018.  As of 2020, FedEx’s current ratio increased to 1.58.  However, in the last two years, the organization has taken steps to reduce its current ratio, which resulted in 1.4 in 2022.  If the trend continues, then the organization will be more in line with other multinational organizations, which will drive to achieve a 1.0 current ratio.  However, investors should not hold their breath for this achievement if their previous performance is any indicator.  From an investor’s perspective, this is an ok trend.

Analyst Grade: B

FedEx Return on Assets.

FedEx’s return on assets (ROA) was 8.7% in 2018.  As of 2022, the return on assets was 4.4%.  The decrease in return on assets indicates that the organization is not utilizing total assets under management in an efficient manner year-over-year from a revenue generation perspective.  From an investor’s perspective, this is a below-average trend.

Analyst Grade: C