Slide 1

Good day! Zhenyu and I will present a concise analysis of Federal Express (FedEx) Corporation
using its financial statements.
Slide 2
The FedEx Corporation, publicly listed as FDX in New York Stock Exchange, is a multinational
delivery service provider of transportation, e-commerce, and high valued-added logistics. Its
business operations have exponentially expanded to global operations, connecting 220+
countries through air and ocean cargo networks, supply chain services, and cross border e-
commerce.
Slide 3
FedEx confronted challenges in the global trade disputes that were clearly affected by the
Chinese economy and continuing trade tensions between Europe and Asia.
Slide 4
However, CEO Smith is confident enough that FedEx can generate 10%+ growth, improve profit
margins, cash flows, and shareholder returns over the long-term especially for FY2019.
Slide 5
Before we begin here are the assumptions of our analysis. All data are US dollars in millions and
its fiscal year ended 31 of May.
Slide 7
We want to focus on FedEx having awful debts that have been resurfaced and reported in the
news from the recent years in the logistics industry. This is due to the increase capital investment
spending last 2017. FedEx bought a large capacity of properties and equipment to handle their
FedEx Express and Logistics operations since the inception of FedEx Logistics last 2016. Hence,
there is a continuing linear increase of total assets by an average of 4%. If we want to prove this
insight, 56% of the 2019 total assets consists of net property and equipment.
Slide 8
However, acquisition of these properties and equipment garnered FedEx with a huge amount of
debts. It can be seen that the growth of FedEx assets is quite similar with the growth of its
liabilities. FedEx total liabilities for 2019 were $36.646B, an 11.34% increase from 2018. Sixty
percent of the 2019 long-term obligations consist of long-term debt. The rapid increase of net
property and equipment and its liabilities is specifically caused by the Aircraft Fleet
modernization project of FedEx. They replaced their old aircrafts with new Aircraft 777s and
767s to create more efficient operations.
However, we cannot deny the fact that shareholders of FedEx corporation may worry because
FedEx's liabilities are increasing annually. The people might reevaluate their share position
whether the company is able to meet their obligations to the shareholders. So, we analyzed the
time series data between FedEx long-term debts against its quick assets. The graph can answer
whether the FedEx corporation can pay its obligations using cash and receivable assets. It can be
clearly seen that throughout time, FedEx long-term debt is rapidly increasing from 2012 with an
exponential growth between 2015-2017. But its cash assets are lower compared to long-term
debt. This might indicate a big problem if they only rely on its cash. The FedEx receivable
through time is also increasing. even the underlying debt, FedEx maintained a strong
management of its resources with US$ 11B cash and receivables at the end of 2019 fiscal year,
enough to cover its obligations from which debt in capital spending has been highly utilized.
On the other hand, While FedEx is maintaining small comfort in debt management, the debt of
United Parcel Services (NYSE: UPS), a FedEx’s rival, poses risks
to its shareholders. The UPS had US$ 12.8B liabilities due within 12 months from a total of US$
35B liabilities. While its quick assets are only US$ 14.19, these only offsets them a net of US$
1.4B which is relatively lower compared to US$3B offset of FDX.
Slide 15
FedEx's current ratio significantly dropped from 2015 but maintained its flow until 2017. The
company has seen its lowest current ratio level for a 5-year interval on 2018 with ratio of 1.39
but increased significantly on 2019 to 1.45. The current ratio is lower compared to a rule-of-
thumb double current ratio but it’s also indicates that its current assets are 1.45 times higher
compared to current liabilities. Moreover, FedEx has maintained its high current ratio from
2015-2019 compared to its rival, UPS.
Slide 16 (You can skip this)
FedEx Corp.’s quick ratio deteriorated from 2017 to 2018 but then slightly improved from 2018
to 2019. This indicates that FedEx is able to pay its current liabilities without getting additional
funding.
Slide 17
We also evaluated the company's financial leverage using debt-to-assets and debt-to-equity in
comparison to UPS. FedEx Corp.’s debt to assets ratio deteriorated from 2017 to 2018 and
maintained its position from 2018 to 2019. Debt-to equity ratio showed a significant increase last
2016-2017. This is also associated with an increase of risk, indicating that FedEx has been
aggressive in their growth using debt or liabilities, as manifested on its balance sheets. However,
its debt-to-equity ratio decreased significantly in 2018-2019 compared to 2016-2017.

The ROE, ROA, and ROI of FedEx improved significantly from 2017-2018 but a huge drop by
87% was seen last 2018 to 2019. This massive drop was mainly due to the failed renewal of
FedEx towards Amazon’s contract which resulted to a quarterly loss of US$ 2B. Hence, FY2019
has not been a good year of operations for the company. FedEx’s enterprise value has been
significantly improving from 2014-2018 with EV of US$ 74.5B but it instantly dropped to USD$
59.5B for FY2019. While FDX has been facing a lot of external problems due to trade war and
others, the company manifested higher profitability ratios compared to rival UPS.