FedEx

By: Jose Alejandro ZunigaACG 2021

March 02, 2010

Executive Summary

• Federal Express is a transportation company that has become one of the largest in the world. It concentrates itself to give a good service to its clients. This company performs more than 3 million deliveries a day. They perform all of their services to more than 220 countries. Its has more than 140,000 employees that work for them and it has annual revenues of $32 billion.

Link Annual report: http://www.fedex.com/us/investorrelations/financialinfo/2009annualreport/files/fedex09ar.pdf

Introduction

• Chief Executive Officer: Frederick W. Smith• World Wide: Memphis, Tenn.

Asia: Hong Kong, China.Canada: Toronto, OntarioEurope: Brussels, BelgiumLatin America: Miami, Florida

• Fiscal Year Ends: August 31• FedEx is one of the largest transportation companies in the

world. It provides services in Asia, United States, Europe, Latin America, Canada, and over 220 other countries. More than 3 million packages are delivered by FedEx daily.

Audit Report

• Independent Auditor: Ernst & Young LLP

• FedEx made the choice to have Ernst & Young LLP as independent auditors to have better accounting principles and practices.

Stock Market Information

• Latest Stock Price: $85.42• 12 Month Range: $92.59-$34.02• Dividend per share: 1 share= $0.11• March 2010• In my opinion I think that FedEx is a good company

to invest into because it’s a company that is stable and always willing to improve. I would say to buy stock from FedEx because it has a good price and its financial health has been good these days so you have a good chance to make some money.

Industry Situation and Company Plans

• FedEx has been a very efficient and innovative company. There financial health has been good in the current year. Fed Ex is preparing for the long future with accessibility, efficiency, good people, and a better understanding of their clients. Their financial goals are: Grow revenue by 10% per year

Achieve 10%+ operating margin Increase EPS by 10%-15% per year Increase cash flow Increase returns

Links:Letter to Stockholder:http://www.fedex.com/us/investorrelations/financialinfo/2009annualreport/files/fedex09ar_letter.pdf

Goals: http://www.fedex.com/us/investorrelations/financialinfo/goals/

Income statement

• The format of the income statement is a Multi-step format.• The 2008 numbers are better and stronger compared to the 2009

numbers. The decrease in 2009 was a cause of the crisis that struck the company and would be expected to improve by next year.

Amount in Millions of US $

May 08 May 09

Gross Profit $26,842 $25,254

Income Operations $2,114 $762

Net Income $1,125 $98

Balance SheetNumber in Thousands May 08 May 09

Assets = 25,633,000 24,244,000

Liabilities + 5,368,000 4,524,000

Stockholders' Equity 14,526,000 13,626,000

Yet again the crisis seems to have a negative effect on the company because the numbers of 2008 are slightly larger than those of 2009. The account that has more change is the liabilities account compared to the stockholders equity account. So this explains the difference between the two assets accounts.

Statement of Cash Flow

• Cash Flow from Operating: [2009: $762 / 2008: $2,114]• Net Incomes: [2009: $98 / 2008: $ 1,125]

As you can see the cash flow from Operating is higher than both of the net incomes in the past two years.

• The major cause of the development of FedEx is due to its equipment and its property plants.

• The primary source of financing of the FedEx company is the sale of their stocks.

• Cash increased from 2008 to 2009. 2009 had a $753,000 increase in cash compared to 2008.

Accounting Policies

• Reclassification: Certain reclassification has been made to prior year financial statements to conform to the current year presentation.

• Revenue Recognition: They recognize revenue upon delivery of shipments for our transportation business and upon completion of services of our business services.

• Property and Equipment: Expenditures for major additions, improvements, flight equipment modifications and certain equipment overhaul costs are capitalized when such costs are determined to extend the useful life of the assets \or are part of the cost of acquiring the assets.

• Long live Assets: Ling-lives assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable.

Financial AnalysisLiquidity Ratios

2006 2007Working Capital. $991 $1,201

Current ratio. 1.18 1.22

Receivable Turnover. 9.48 9.44

Average days sale uncollected.

39.19 40.30

Inventory Turnover. 88.87 84.16Average days Inventory On hand.

4.47 4.48

As you can see the company improved its numbers in a very good way they where starting to build up strong in financial ways. In 2008 I bet there numbers got better because they were starting to become productive.

Financial AnalysisProfitability Ratios

2006 2007

Profit Margin 2.96% 0.28%

Assets turnover 1.53 1.42

Return on Assets 8.4 4.5

Return on Equity 17.1 16.7

As you can see in the graph assets turnover had a 1.53 in 2006 and decreased in 2007 to 1.42 you can see the effiency on how they are using their assets in the past two years. There was a decrease on how much income is earned in every dollar. There was a decrease in every dollar invested too.

Financial AnalysisSolvency Ratio

• Debt to Equity : 0.1 in 2006 and 0.2 in 2007• As you can see there is not much of a

difference in the debt to equity because it only had a 0.1 increase in 2007.

Financial AnalysisMarket Strength Ratios

• Price earning per share: 2006 was 3.60 in 2007 was 6.48

• Dividend Yield: 2006 was 0.322% and in 2007 was 0.4%