28 Jun FEDEX ANALYSIS
swer these questions about Fedex:
A.Management Scenario:
You are to review the financials in the role of the President/CEO. At the latest shareholder meeting, you were accused by shareholders of not effectively using your companys resources (namely, long-term assets and capital resources).
?Are the shareholders being fair?
?How does your company compare to its major competitor?
?If you cannot defend yourself, what can you do to improve your companys situation?
?Focus on the asset utilization ratios and on the profitability ratios in drawing your conclusions.
?Also keep in mind the MD&A and what they indicate about the company and its potential for growth and/or profits.
Page 2 needs to answer these questions about Fedex:
B.Lender Scenario:
You are the loan officer for a commercial lender. You have just received a request from the company you are researching to provide loan funds that will allow the company to buy back 3% of its outstanding common stock. The company has indicated to you that it feels their stock is undervalued at this time.
?What is your response to their request?
?What will this do to the companys various debt and equity ratios?
?Given the competition, should the company alter its capital structure in this way?
?What interest rate would apply to the loan, and what will happen to the companys TIE/FCC calculations if the loan is pursued?
Pages 3 thru 4 need to cover the Profitability/Investor Ratios and analysis. Highlight trends and express opinion on strengths/weaknesses of FedEx and how it compares to competitors.
Ive included the ratios below to be used in the analysis for pages 3 and 4. Ive also included all the other ratios that may be helpful for pages 1 and 2. If youd like the ratios in excel format please let me know and Ill send them asap.
Ratio Analysis
LIQUIDITY RATIOS 2013 2012 2011 2010 2009 FedEx
Days Sales in Receivables 343.72 1695.36 381.99 372.31 572.99 43.31
Days Sales in Inventory 3.04 2.72 2.68 2.65 2.45 1.79
Accounts Receivable Turnover 1.09 0.21 1.00 1.00 0.63 8.71
Accounts Receivable Turnover days 333.71 1712.35 363.71 364.32 583.14 41.89
Inventory Turnover 121.62 14.22 8.02 9.60 136.34 214.58
Inventory Turnover in Days 3.00 25.66 45.49 38.03 2.68 1.70
Payables Turnover 20.36 23.08 22.02 23.50 23.05 0.00
Average Days Payables Outstanding 17.93 15.81 16.58 15.53 15.83
Working Capital (In Millions) $6,304 $8,982 $5,803 $6,022 $3,889 $5,775
Working Capital Turnover 7.25 7.32 8.98 10.00 18.42 15.34
Current Ratio 1.89 2.36 1.90 2.09 1.72 2.05
Quick Ratio 1.83 1.80 0.99 1.26 1.67 2.01
Operating Cycle (In days) 336.71 1738.01 409.20 402.35 585.81 43.59
Trade Cycle (In days) 318.78 1722.20 392.62 386.82 569.98
LONG-TERM DEBT RATIOS
Debt Ratio 0.82 0.88 0.80 0.76 0.76 0.48
Debt to Equity Ratio 4.58 7.21 3.88 3.18 3.14 0.93
Times Interest Earned Ratio -18.56 -3.48 -17.60 -15.94 -7.91 -30.94
PROFITABILITY RATIOS
Gross Profit Margin 100.00% 100.00% 100.00% 100.00% 100.00% 98.77%
Operating Profit Margin 67.56% 89.35% 68.29% 65.45% 68.79% 3.73%
Net Profit Margin 62.16% 60.09% 62.57% 59.17% 56.10% 3.55%
Total Asset Turnover 0.19 0.04 0.18 0.17 0.11 1.39
Fixed (Operating) Asset Turnover 0.31 0.06 0.27 0.25 0.15 2.04
Return on Assets(ROA) 12.66% 3.26% 12.16% 11.28% 7.57% 5.18%
Return on Common Equity 77.93% 13.63% 50.20% 42.41% 27.19% 9.72%
Dupont Analysis 0.12 0.02 0.11 0.10 0.06 0.05
INVESTOR RATIOS
Price to Earnings Ratio (P/E) 22.79 88.83 19.06 21.80 29.27 17.07
Dividends Payout Ratio 0.13 0.69 0.14 0.14 0.23 0.03
Dividend Yield 0.59% 0.77% 0.71% 0.65% 0.78% 0.17%
Earnings Per common share 4.65 0.84 3.88 3.36 1.97 4.96
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