FedEx: Brief Summary

FedEx (FDX) has its home headquarters in Memphis, Tennessee.  The organization competes in the integrated freight and logistics industry, specifically the industrial sector.  At present, there are proximally 500,000 employees working full-time for FedEx.

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 does pay out quarterly dividends and a dividend yield of 1.64%.  His current beta is 1.33.  This indicates that the organization’s stock is slight to moderately riskier as compared to the overall market.

FedEx Financial Report Sources

“FedEx 2019 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 2018 10k, 2017 10k annual report, 2016 10k annual report, 2015 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 important.  From this, 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 offer a summary analysis of FedEx's important income statement line item trends from 2015 to 2019, in most cases.

FedEx: Revenue Growth.

In 2015, the FedEx Corporation ended the year with approximately $47.4 billion in revenues.  In the next four years, the company would continually grow its revenues until the end of 2019 with approximately $69.7 billion in revenues.  For mature multinational corporations such as FedEx, this continued growth rate over a five-year span is most impressive.  However, as we will see in the dividend payout section, the company may be preparing for slowed revenue growth due to dividend reductions.  Only time will tell though.

Section 2: FedEx Balance Sheet Analyzed

For the FedEx balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define their balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer a summary analysis of their important balance sheet line items.

FedEx: Short-Term Investments.

The FedEx Corporation had no short-term investments in the last five years noted on its balance sheet.  Granted, the organization has continually increased its revenues over the last five years.  This indicates that the company is in an expansionary business cycle.  However, without short-term investments, the organization may not be holding and utilizing its liquid cash at an optimal level.  For a better perspective on this, an in-depth analysis of its cash position is needed.  As a general rule though, organizations should utilize short-term investments.  This is just my most humble of opinions.

Section 3: FedEx Financial Ratios Analyzed

For this section, I have chosen several different financial ratios to review for FedEx from 2015 to 2019.  In reviewing each of their financial ratios, I first start with 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. 

FedEx Current Ratio.

FedEx's current ratio for 2015 ended the year at 1.84.  This indicates that the organization had a significant amount of current assets on hand as compared to current liabilities.  With the golden rule at 1.0 for the current ratio, the firm needs to do a better job of better aligning its current asset needs with current liabilities.  The company may be able to do this by divesting some of its current assets to longer-term assets such as property, plants, and equipment, or even paying out additional dividends to shareholders.  Fortunately, the organization does reduce its current ratio in the next four years, ending 2019 at 1.45.  

FedEx Total Asset Turnover.

FedEx fixed asset turnover in 2015 was 2.27.  Their fixed asset turnover would fall in 2016 to 2.07.  However, they would rebound in 2017 and 2018 with a fixed asset turnover of 2.32.  However, their fixed asset turnover would slightly reduce in 2019 to 2.29.  It’s interesting that the organization is able to continually increase the revenues but they are not able to increase the efficient usage of their fixed assets.  

FedEx Return on Assets.

In 2015, the FedEx Corporation had a return on assets of 2.83%.  In the next four years, the return on assets would grow to 8.74%.  However, in 2019, the return on assets would drop through the floor to .99%.  This indicates that the management may have acquired too many assets as compared to revenues.  A common remedy for this ailment is for FedEx’s executive team to liquidate property, plant, and equipment that is underperforming.

FedEx Debt ratio.

In 2015, the FedEx Corporation had a debt ratio of 19.5%.  In the next two years, their debt ratio would balloon to 30.71% ending in 2017.  In the next two years, the organization would hold steady with a 30.5% debt ratio in 2019.  The significant increase in debt for FedEx is a common practice for multinational corporations.  By taking on debt, the organization is able to make money on borrowed funds as well as increase its dividend payout to shareholders.