UPS Financial Statements and Financial Ratios Analyzed
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Hey All,
Thanks for visiting my UPS Financial Report page. On this page, you will be able to find preliminary information about UPS current financial performance as well as some historical track records and trends.
For a more detailed examination of UPS financial performance, please check out the “Financial Report”. In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:
- Summarized income statement for the last 5 years.
- Summarized balance sheet for the last 5 years.
- Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
- Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
- Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
- Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
- Each section includes an “in other words” segment. This is were I use plain English to explain concepts.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
Sincerely,
Paul, MBA.
Sample Financial Report
Sample Table of Contents for Financial Reports
Table of Contents
Page Count: 88 Pages
- Disclaimer 3
Acknowledgments 4
Forward 5
About the Author 7
Company Summary 8
Financial Statement Introduction 10
Income Statement 11
Walmart’s Income Statement – Summary Analysis 12
Income Statement Discussion 12
Balance Sheet 21
Balance Sheet – Summary Analysis 22
Balance Sheet Discussion 23
Financial Ratios 38
Liquidity Ratios 39
Liquidity Ratios – Summary Analysis 39
Liquidity Ratios Discussion 40
Current Ratio 40
Quick Ratio 41
Cash Ratio 42
Other Liquidity Ratios 42
Net Operating Working Capital 42
Asset Ratios 44
Asset Utilization Ratios – Summary Analysis 45
Asset Utilization Ratios Discussion 46
Total Asset Turnover 46
Fixed Asset Turnover 46
Days Sales Outstanding 47
Inventory Turnover 48
Accounts Receivable Turnover 49
Accounts Payable Turnover 50
Other Asset Ratio Calculations 50
Working Capital Turnover 50
Average Days in Inventory 51
Average Days Payable 51
Profitability Ratios 52
Profitability Ratios – Summary Analysis 53
Profitability Ratios Discussion 53
Return on Assets (ROA) 53
Return on Equity (ROE) 54
Profit Margin 55
Gross Profit Margin 56
Operating Profit Margin 56
Basic Earnings Power 57
ROCE 57
Capital Employed 58
Debt Ratios 59
Walmart’s Debt Ratios – Summary Analysis 59
Debt Ratios Discussion 60
Long-Term Debt Ratio 60
Debt to Equity Ratio 61
Times Interest Earned 61
WACC 63
Book Value of WACC 63
Free Cash Flow (FCF) 65
Free Cash Flows – 2016 – 2020 65
Free Cash Flows – 5 Year Projections 66
Income Statement – Projections for 5 years 67
Income Statement – 5 Year Projections 67
Balance Sheet – Projections for 5 years 68
Balance Sheet – 5 Year Projections 68
Company Valuation and Intrinsic Stock Price 70
Appendix 1: Summarized Income Statement 71
Appendix 2: Income Statement – Percent of Sales 72
Appendix 3: Income Statement – Year over Year Growth 73
Appendix 4: Summarized Balance Sheet 74
Appendix 5: Balance Sheet as Percent of Total Assets 76
Appendix 6: Summarized Financial Ratios 77
United Parcel Service (UPS) Brief Summary
UPS has its global headquarters in Atlanta, Georgia. The organization competes in the industrial sector of the economy. Specifically, UPS competes in the integrated freight and logistics industry. Based on industry research, the company currently employs almost 261,000 individuals. The main generator for revenues of the company would be there package delivery service. At present, UPS has a presence in a multitude of areas like the United States, South America, Africa, the Middle East, and Europe.
From a financial perspective, UPS has a market capitalization of $101 billion. Their beta is .85. This indicates that UPS stocks are well below overall market risk. In the last 12 months, the company has paid out a dividend yield of 3.42%. In contrast to other multi-national corporations, UPS pays out dividends semiannually as compared to quarterly. The company’s 52-week stock price range has fluctuated between $82-$125 and $0.31.
UPS Financial Report Sources
“UPS 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 UPS 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: UPS Income Statement Analyzed 2015 to 2019
In this section, I walk through a broad definition as to 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 UPS important income statement line item trends from 2015 to 2019, in most cases.
UPS Revenue Growth.
UPS ended 2015 with revenues of approximately $58.3 billion. In the next several year’s company UPS would continually increase the revenues ending 2019 at $74 billion. This continued growth rate shows that the organization is able to adapt to a continually changing environment, specifically, new competitors entering the market like Amazon.
UPS Income Statement 2019 | |||||
| Column1 | 2019 | 2018 | 2017 | 2016 | 2015 |
| Revenues | 74,094 | 71,861 | 66,585 | 60,906 | 58,363 |
| COGS | 15,879 | 16,836 | 14,386 | 11,247 | 10,525 |
| Gross Profit | 58,215 | 55,025 | 52,199 | 49,659 | 47,838 |
| SG&A | 38,908 | 37,235 | 34,577 | 34,770 | 31,028 |
| Depreciation | 2,360 | 2,207 | 2,282 | 2,224 | 2,084 |
| R & D | – | – | – | – | – |
| Other | |||||
| Operating Expenses | 66,296 | 64,837 | 59,056 | 4,623 | 4,636 |
| EBIT | 7,798 | 7,024 | 7,529 | 5,467 | 7,668 |
| Other Income | |||||
| Interest Expense | 653 | 605 | 453 | 381 | 341 |
| EBT | 5,652 | 6,019 | 7,137 | 5,136 | 7,342 |
| Taxes | 1,212 | 1,228 | 2,232 | 1,705 | 2,498 |
| Net Income | 4,440 | 4,791 | 4,905 | 3,431 | 4,844 |
Section 2: UPS Balance Sheet Analyzed from 2015 to 2019
For UPS 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.
UPS Cash.
In 2015, UPS ended the year with $2.7 billion in cash. In the next year, the company would increase their cash position slightly to $3.4 billion. However, in 2017, the cash with position would fall slightly to 3.3 billion only to grow substantially to $5.2 billion in 2019. The fluctuation in the cash position may indicate that executives do not have a working business model in relations to how much cash is needed for operations and buffering.
UPS Summary Balance Sheet 2019 | |||||
| Column1 | 2019 | 2018 | 2017 | 2016 | 2015 |
| Cash | 5,238 | 4,225 | 3,320 | 3,476 | 2,730 |
| Short Term Investment | 503 | 810 | 749 | 1,091 | 1,996 |
| Account Receivable | 9,552 | 8,958 | 8,773 | 7,695 | 7,134 |
| Inventory | |||||
| Other | |||||
| Current Assets | 17,103 | 16,210 | 15,548 | 13,849 | 13,208 |
| Net PPE | 30,482 | 26,576 | 22,118 | 18,800 | 18,352 |
| Goodwill | 3,813 | 3,811 | 3,872 | 3,757 | 3,419 |
| Other | |||||
| Total Assets | 57,857 | 50,016 | 45,403 | 40,377 | 38,311 |
| Accounts Payable | 5,555 | 5,188 | 3,872 | 3,042 | 2,587 |
| Accrued Expense | 2,552 | 3,047 | 2,521 | 2,317 | 2,253 |
| Accrued Taxes | |||||
| Notes Payable | |||||
| LT Debt – Current | 3,420 | 2,805 | 4,011 | 3,681 | 3,018 |
| Other | |||||
| Total Current Liabilities | 15,413 | 14,087 | 12,708 | 11,730 | 10,696 |
| LT Debt | 21,818 | 19,931 | 20,278 | 12,394 | 11,316 |
| Other | |||||
| Total Liabilities | 54,574 | 46,979 | 44,373 | 39,948 | 35,820 |
| Common Stock | 150 | ||||
| Treasury | 26 | 32 | 37 | 45 | 51 |
| Retained Earnings | 9,105 | 8,006 | 5,858 | 4,879 | 6,001 |
| Other | |||||
| Total Equity | 3,283 | 3,037 | 1,030 | 429 | 2,491 |
| Total Equity & Liability | 57,857 | 50,016 | 45,403 | 40,377 | 38,311 |
Section 3: UPS Financial Ratios Analyzed from 2015 to 2019
For this section, I have chosen several different financial ratios to review for UPS 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.
UPS Current Ratio.
UPS ended 2015 with the current ratio of 1.23. This at the current ratio is slightly above 1.0 that is the gold standard for most companies. Because the organization does continually receive an influx of cash from customers on a daily basis, having a lower current ratio may indicate optimized usage of current assets. In the next four years, the organization’s current ratio would fluctuate between 1.22 in 2017 to a five-year low of 1.11 in 2019. Again, and my most humble of opinions, UPS might even be able to get away with a .9 current ratio and still be considered solvent in the short term.
UPS Total Asset Turnover.
UPS’s total asset turnover ended 2015 at 1.52. In the next four years, the organization would continually reduce its total asset turnover in 2019 at 1.28. This indicates that the organization is taken on more assets and they are not generating revenues for the organization. To mitigate this problem, the company may want to consider liquidating fixed assets that are underutilized or even increased its dividend payout.
UPS Return on Assets.
UPS’s return on assets ended 2015 at 12.64%. In the next year, the return on assets for UPS would fall to 8.5%. Fortunately, this ratio would then increase in 2017 to 10.8%. However, the most concerning trend is that in the next two years, UPS would continually reduce the return on assets and 2019 at 7.6%. The continued fall of the company’s return on assets further highlights the need for the company to either start making more revenues on assets held or start liquidating underutilized assets.
UPS Debt ratio.
UPS ended 2015 with a debt ratio of 29.54%. As compared to other multinational organizations, this debt ratio seems to be about par for the course. However, in the next two years, the organization would substantially increase the debt ratio ending 2017 at 44.66%. Fortunately, though the organization would then take steps to reduce their debt ratio ending 2019 at 37.71%. However, even 37.71% is still a high debt ratio for UPS. A better strategy would be for the organization to possibly use some of their current assets to pay down accumulated debt.
UPS Liquidity Ratios 2019 | |||||
| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Current Ratio | 1.11 | 1.15 | |||
| Cash Ratio | 0.34 | 0.30 | |||
| Quick Ratio | 1.11 | 1.15 | |||
| Net Working Capital | 6,683 | 4,948 | |||
UPS Asset Utilization 2019 | |||||
| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Total Asset Turnover | 1.28 | 1.44 | |||
| Fixed Asset Turnover | 2.43 | 2.70 | |||
| Days Sales Outstanding | 47.05 | 45.50 | |||
| Inventory Turnover | #DIV/0! | #DIV/0! | |||
| Accounts Receivable Turnover | 7.76 | 8.02 | |||
| Working Capital Turnover | 11.09 | 14.52 | |||
| AP Turnover | 13.34 | 13.85 | |||
| Average Days Inventory | #DIV/0! | #DIV/0! | |||
| Average Days Payable | 0.04 | 0.04 | |||
UPS Profitability Ratios 2019 | |||||
| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Return on Assets | 7.67% | 9.58% | |||
| Return on Equity | 135.24% | 157.75% | |||
| Net Profit Margin | 5.99% | 6.67% | |||
| Gross Profit Margin | 78.57% | 76.57% | |||
| Operating Profit Margin | 10.52% | 9.77% | |||
| Basic Earning Power | 13.48% | 14.04% | |||
| ROCE | 18.37% | 19.55% | |||
| Capital Employed | 42,444 | 35,929 | |||
| ROIC | 16.48% | 17.74% | |||