Kutaisi International University

Management School
Faculty of Management Science

Financial analysis of FedEx Corp.

Course Name: Corporate Finance and Risk Management

Group Members:
Lile Gotsadze
Mariam Burjaliani
Nino Sutidze
Nini Vakhtangadze

Levan Gogoladze, Proffesor

Tamila Nutsubidze, Teaching Assistant

Kutaisi
2024

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Table of Contents
1. Introduction of the Company…………………………………………………………………………………………….3
1.1 Company profile..........................................................................................................................3
1.2 Business model of the Company..................................................................................................3
1.3 Size...............................................................................................................................................4
1.4 Business and Financial objectives................................................................................................5
1.5 Growth rate and Sales projections................................................................................................6
2. Analysis of the Company Financial statements…………………………………………………………………..6
2.1 How much debt the company has relative to equity...........................................................................6
2.2 How liquid the Boeing is in the short term (less than one year).........................................................7
2.3 What percentage of assets are tangible and what percentage comes from financial transactions?.....8
2.4 How long it takes to receive outstanding payments from customers and repay suppliers..................9
2.5 How long it takes to sell inventory the business keeps on hand.......................................................10
3. Analysis of the Cash Flow statements………………………………………………………………………………10
3.1 The liquidity situation of the company............................................................................................10
3.2 The company’s sources of cash.......................................................................................................10
3.3 The free cash flow the company generates to further invest in assets or operations........................11
3.4 Whether overall cash has increased or decreased.............................................................................11
4. Financial Ratio Analysis……………………………………………………………………………………………………12
4.1 Market value ratios:.........................................................................................................................12
4.2 Liquidity ratios:...............................................................................................................................12
4.3 Long-term solvency or financial leverage ratios..............................................................................13
4.4 Profitability ratios............................................................................................................................13
4.5 Turnover or assets management ratios.............................................................................................14
5. Recommendations………………………………………………………………………………………………………………….14
6. Conclusion……………………………………………………………………………………………………………………………….15
7. References……………………………………………………………………………………………………………………………….15
8. Appendices: …………………………………………………………………………………………………………………………..16

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 1. Introduction of the company
1.1 Company Profile
FedEx Corporation (founded in 1971 in Memphis, Tennessee by Frederick W. Smith), is
a world-renowned provider of transportation, e-commerce, and business services. Renowned for
pioneering express delivery, FedEx revolutionized logistics with its integrated air and ground
networks. The company is managed through a number of subsidiaries including FedEx Express,
FedEx Ground, FedEx Freight, and FedEx Services. These are offered around the world and are
geared towards businesses and individuals and offer fast and reliable package and freight
delivery. FedEx provides a wide variety of customers worldwide, across different industries and
sectors. It has a customer base that consists of individuals, small businesses, corporations, and
government organizations. Such delivery jobs are handled by FedEx as the intermediary between
the sender and the receiver, efficiently, safely, and on time. Their infrastructure, technology, and
global network make this possible.

1.2 Business Model

Core Segments of FedEx include: FedEx Express, which is the company's largest
segment and focuses on time-sensitive, overnight, and international deliveries, it generates 50%
of the corporation’s revenue. The segment serves both the U.S. and international markets. FedEx
Ground: This segment offers cost-effective, ground-based delivery services for businesses and
consumers, particularly within the U.S. and Canada, generating 35% of revenue. FedEx Freight
specializes in less-than-truckload (LTL) freight transportation, catering to businesses with
smaller shipment volumes, generating 10% of revenue. FedEx Logistics focuses on supply chain
management, offering services such as customs brokerage, warehousing, and distribution,
generating 5% of total revenue.
FedEx employs a dynamic pricing model across its services, with list price adjustments
reflecting changes in fuel costs, service needs, and market conditions. FedEx's cost structure
includes three major expenses in 2023 - Salaries and Employee Benefits: The largest expense,
totaling $31,019 million. Purchased Transportation: Costing $21,790 million, this includes third-
party transportation services such as trucking and air freight, supporting FedEx’s delivery
operations. Fuel Costs: Amounting to $5,909 million, this significant expense covers fuel for
FedEx’s extensive fleet of vehicles and aircraft. In conclusion, FedEx’s business model is built
around providing fast, reliable, and cost-effective delivery and logistics solutions globally. By
leveraging technology, a diverse service portfolio, and strategic partnerships, FedEx remains a
leader in the logistics and transportation industry.

1.4 Size
As of the fiscal year ending May 31, 2023, FedEx Corporation reported total revenues of
approximately $90.155 billion, reflecting its position as one of the largest logistics and

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transportation companies in the world. FedEx operates across more than 220 countries and
territories, supported by a global workforce of over 530,000 employees. The company’s
extensive infrastructure includes 700+ aircraft, over 200,000 motorized vehicles, and a network
of advanced distribution facilities. FedEx's market capitalization for 2023 May 31 is $ 51,409
million, positioning it as the second-largest company in the U.S. integrated freight and logistics
industry, following UPS.

1.5 Business and financial objectives

FedEx’s long-term goals are focused on sustainable growth and enhancing shareholder
value. The company aims to increase its earnings per share (EPS) by 10% to 15% annually. This
growth will be driven by expanding its profitable revenue streams, which will help the company
achieve an operating margin of 10% or more. Furthermore, FedEx seeks to improve its cash
flows, ensuring a solid financial foundation for reinvestment and operational efficiency. Another
key objective is to increase Return on Invested Capital (ROIC). By consistently delivering strong
financial results, FedEx plans to increase returns to shareholders. FedEx is committed to
achieving sustainable growth and profitability through a series of strategic initiatives aimed at
optimizing its business operations and enhancing customer value. Cost-Saving Initiatives: The
DRIVE program by FedEx, targeting $4 billion in annualized cost savings by fiscal year 2025,
focuses on streamlining processes, reducing overhead, and leveraging economies of scale.
Another program: The Network 2.0 initiative aims to integrate FedEx’s operational segments,
optimizing delivery routes and reducing inefficiencies, with additional savings of $2 billion
projected by fiscal year 2027.

1.6 Growth rate and Sales Projections

Growth Rate and Sales Projections Consolidated revenue decreased by 3.59% in 2023
compared to 2022, from $93,512 million to $90,155 million. Revenue changes across segments:
FedEx Express: 7% decrease in 2023 due to lower global volume and unfavorable currency
impacts. FedEx Ground: Increased by 1% due to yield improvements despite lower volumes.
FedEx Freight: Revenue rose by 1%, driven by yield improvements . Future Projections: Capital
expenditures are expected to decrease by $0.5 billion in 2024, focusing on network optimization
and modernization. Macroeconomic pressures like high inflation and interest rates are projected
to continue affecting [Link], looking ahead, FedEx has projected a revenue growth rate
of 3.2% for fiscal year 2024, with expectations of further recovery in fiscal year 2025.(see
appendix)

2. Analysis of FedEx’s Financial Statements

2.1 Debt to Equity
For 2023(the fiscal year ended on May 31), FedEx's Debt-to-Equity ratio was 0.79. This
is calculated by dividing the total debt of FedEx (which includes both the current portion of long-

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term debt and long-term debt) by total equity: Total Debt for 2023: $126 million + $20,453
million = $20,579 million, Total Equity for 2023: $26,088 million, D/E for 2023= 20,579 /
26,088 = 0.79. In the same quarter of 2023, United Parcel Service(UPS), a key competitor, had a
higher D/E ratio of 1.04, indicating a greater reliance on debt for financing compared to FedEx.
FedEx saw a 4.6% increase in equity and a 1.55% increase in debt. Equity increased more
significantly than debt, primarily as a result of higher retained earnings, which rose from $32,782
million to $35.259 million. Additionally, the DRIVE program's initiatives, which concentrate on
long-term cost reductions, have improved shareholder equity in addition to profitability. FedEx
had the lowest total D/E ratio in the transport and logistics industry in 2023, placing it at #1.
FedEx's continuous efforts to improve its financial position are reflected in the D/E ratio's
improvement from 0.81 in 2022 to 0.79 in 2023. Equity growth outpaced debt growth despite
stable total debt levels, indicating efficient management and less dependence on outside funding.
2.2 Liquidity of the business in the short term
For determining the company’s short-term liquidity, in this section Cash Ratio will be
used, because it focuses on the company’s most liquid assets – cash & cash equivalents. FedEx
had $6,856 million in cash and cash equivalents in 2023, a minor decline from $6,897 million in
2022 When it comes to current liabilities, it decreased from $14 274 million to $13 586 million.
Cash Ratio in 2023 was 6 856/13586 = 0.50, which shows a 0.02 increase from 0.48 in 2022.
The cash ratio increased as a result of a greater reduction of 688 million USD in current
liabilities, even though cash reserves decreased slightly between 2022 and 2023. This implies
FedEx has handled its short-term commitments well. In 2023, FedEx ranks second in the
Transport & Logistics sector with a favorable cash ratio of 0.50. It still lags behind UPS, which
had a higher cash ratio of 0.62. This suggests that even though FedEx's liquidity has increased, it
can still be strengthened in comparison to its main rival.
2.3 Tangible assets and financial transactions
FedEx’s tangible assets include the following accounts from the balance sheet: Cash and
Cash Equivalents, Property and Equipment at cost, and (Spare parts, supplies, and fuel). In 2023
Total tangible assets were: $6,856 million+$40,698 million+ $604 million= 48 158 million USD,
compared to total assets ($87,143 million)- 55.26%. For transaction–driven assets following
accounts are included: Accounts Receivable - $10,188 million and Operating lease right-of-use
assets - $17,347 million, 31.59% of Total Assets. Under The Cash Flow statement in the
investing activities account- purchase of investments, which might include stock purchases of
other companies or other financial instruments) was not used in calculations, because FedEx
does not provide detailed information about them and does not disclose it as a separate asset on
the balance sheet. The percentages of transaction-driven assets and tangible assets in 2022 were
55.26% and 33.59% respectively. FedEx's capital-intensive business model is reflected in the
fact that its tangible assets in 2022 and 2023 accounted for over half of its total assets. The rise in
operating lease assets and FedEx's continuous investment in material assets like real estate and

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machinery demonstrate the company's emphasis on supporting its operational and physical
infrastructure.
2.4 DSO & DPO
2.4.1 Days Payable Outstanding
For the fiscal year that concluded on May 31, FedEx's Days Payable Outstanding
(Accounts Payable/COGS*365) was 35.07 in 2023, up from 35.02 in 2022. DPO showed a
declining trend over the last five years, despite a slight increase from 2022 - 2023. This suggests
that the company has been more effective in managing its payables during this time, which
means FedEx is taking fewer days to pay its suppliers. This is a sign of better cash flow
management, which may lead to better-working capital management and increased company
liquidity. These results are in contrast to those of its largest competitor, UPS, which had DPOs of
39.95 in 2023 and 46.1 in 2022. To conclude, FedEx's strategy may favor long-term supplier
trust and operational stability, while UPS may benefit more from short-term liquidity flexibility
due to its larger cash on hand.
2.4.1 Days Sales Outstanding

DSO FedEx's Days of Sales Outstanding (Accounts Receivable/Total Credit Sales*365)

was 41.57 on May 31, 2023, down from 46.65 on the same date in 2022. Over the last five years,
FedEx's DSO has generally been declining, indicating that the company has been increasing the
effectiveness of its accounts receivable collection efforts. A comparison to UPS, which had a
DSO of 45.43 in 2023 and 46.06 in 2022, suggests that it is more efficient at converting sales
into cash.

2.5 Inventory – DIO, Inventory Turnover & CCC

FedEx’s Days Inventory Outstanding (DIO) is calculated based on inventory turnover
with the formula: 365/Inventory turnover. The inventory turnover ratio was taken for analysis
without calculation from a reliable source because FedEx does not include COGS as a separate
account on its income statement. The company’s inventory turnover (COGS/Average Inventory)
in 2023 was -66.31 and in 2022- 65.95, which shows an increase. Lower carrying costs and
increased profitability may result from this trend because the company is effectively managing
and selling its inventory more quickly. When it comes to DIO in 2023 it slightly decreased from
5.53 in 2022 to 5.5 in 2023. Faster inventory turnover is indicated by a lower DIO number over
time, indicating that FedEx has been successful in optimizing its inventory levels and reducing
the costs associated with excess holding. UPS took a little longer than FedEx to sell its inventory
in 2023, as evidenced by the fact that UPS's DIO (5.89) was higher than FedEx's (5.5). This
might point to FedEx's comparative edge in 2023 inventory control. FedEx's Cash Conversion
Cycle (CCC) = DIO+DSO-DPO is another important point that we can examine. CCC was 11.37
days for UPS and 12.0 days for FedEx. UPS has a small advantage in CCC due to its longer

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DPO, even though FedEx manages inventory and receivables more efficiently. Although both
businesses exhibit excellent working capital management techniques, UPS's longer payment
terms give it a slight edge in turning resources into cash more quickly.

3. Cash Flow Statement Analysis

3.1 Liquidity situation of FedEx
FedEx's core business generated $8,848 million in 2023, $984 million less than its 2022
total of $9,832 million. This decline tells us that the company faced challenges in turning its
business activities into cash. FedEx spent more money to settle its debts in 2023. Accounts
payable dropped by $3,331M in 2023 as opposed to $1,861M in 2022. This indicates that FedEx
paid off debt and other obligations with a sizable amount of its cash. Retirement plan
modifications decreased cash flow by $650 million in 2023 as opposed to increasing cash flow
by $1,578 million in 2022, demonstrating the significant impact that post-retirement and pension
costs had on liquidity. On the other hand, FedEx improved its cash flow by collecting $782M in
2023, reversing a loss of $(310)M in 2022. This enhancement demonstrates how FedEx
improved customer payment management, generating more revenue more rapidly. Since
operating cash flow is positive in both years and is not offset by financing and investing
activities, the company's core business operations are sufficiently profitable.
3.2 Sources of Cash
FedEx's primary sources of revenue are its core business activities, which include
package delivery, freight services, and logistics management through its three main business
segments: FedEx Express, Ground, and Freight. The primary source of cash inflows for these
services is customer payments. The business also raises money through financing initiatives like
share repurchasing and stock issuance While investing activities, such as CAPEX, consumed
significant cash, they were aimed at the company's long-term growth, including new assets and
facility upgrades. FedEx balanced dividends, share repurchases, and debt repayments through its
financing activities; in 2023, it spent $1.2 billion on dividends and $1.5 billion on share
buybacks. The company's liquidity stayed steady in spite of these outflows.
3.3 Free Cash Flow(FCF)
Free Cash Flow (FCF) Calculation: FCF = Operating Cash Flow - Capital Expenditures.
In 2023 FCF was: $8,848M - $6,174M = $2,674M. In contrast, FCF was $9,832M - $6,763M =
$3,069M in 2022. The decline in FCF from $3,069M in 2022 to $2,674M in 2023 reflects the
impact of decreased operating cash flows and continued high capital expenditures. This might
constrain FedEx's capacity to make growth investments or increase shareholder returns without
depending on outside funding. However, FCF is still positive, indicating that FedEx generated a
healthy amount of cash that could be used for other purposes even after investing in its capital
assets (such as its fleet and infrastructure).

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 3.4 Overall Cash
The overall cash for FedEx slightly decreased from $6,897 million in 2022 to $6,856
million in 2023, despite the cash generated by operating activities remaining strong at $8,848
million. Higher cash outflows from financing and investing activities are the cause of this
decline. In particular, $6,174 million was spent on investing activities, mostly for capital
expenditures, and $2,597 million was spent on financing activities, which included $1,500
million in share repurchases and $1,177 million in dividend payments. Furthermore, the impact
of exchange rate fluctuations on cash was negative for both years, totaling $118 million in 2023
and $187 million in 2022. This was probably caused by FedEx's international operations being
impacted by global currency fluctuations. Compared to the $190M decline in cash & cash
equivalents for 2022, the $41M decline in 2023 is significantly less. This demonstrates that
FedEx effectively managed its investments and expenditures despite the decline in operating
cash flow. Regardless of maintaining strong operating cash flows, FedEx's overall cash flow
decreased as a result of a sizable allocation of funds to strategic investments and shareholder
returns. The company's ability to consistently produce operating cash in spite of this decrease
shows its financial stability and dedication to long-term growth and increasing shareholder value.

4. Ration Analysis

4.1 Turnover Ratios Analysis

Fixed Asset Turnover:

The fixed asset turnover ratio reflects how efficiently a company utilizes its fixed assets
to generate revenue. For FedEx Corporation, the ratio declined from 2.44 in May 2022 to 2.20 in
May 2023, indicating a marginal reduction in the efficiency of asset utilization. This decline
suggests that FedEx generated less revenue per dollar of fixed assets in 2023 compared to the
prior year. In relation to UPS(2.46) and Industry(3.16), it can be said that FedEx has
underperformed in both years.

Calculation(2023) – 90,155(revenue)/40,698(fixed assets/ Net property and equipment) = 2.20.

Calculation(2022) – 93,512 (revenue)/ 38,091 (fixed assets) = 2.44

Total Asset Turnover:

The total asset turnover ratio assesses how effectively a company uses its total assets to
generate [Link]'s ratio decreased from 1.09 in 2022 to 1.03 in 2023, signaling a decline
in overall efficiency. Similarly, UPS experienced a drop in its total asset turnover ratio, falling
from 1.41 in 2022 to 1.28 in [Link] these decreases, both FedEx and UPS outperform the

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industry average of 0.67 in 2023 (up slightly from 0.66 in 2022), showcasing stronger asset
utilization compared to other companies in the industry.

Calculation(2023) – 90,155(revenue)/ 87,143 (Total Assets) = 1.03

Calculation(2022) – 93,512 (revenue)/ 85,994 (Total Assets) = 1.09

4.2 Profitability Ratios Analysis

Net Profit Margin:

The net profit margin measures how much profit a company retains from its total
revenue after accounting for all expenses. FedEx's net profit margin improved slightly from
4.09% in 2022 to 4.41% in 2023, indicating minor growth in profitability. When compared to
UPS, FedEx's net profit margin of 4.41% in 2023 is significantly lower than UPS's 7.37%,
which shows UPS is more efficient in converting revenue into profit. Similarly, FedEx
underperforms against the industry average, which increased from 5.27% in 2022 to 8.61% in
2023, reflecting a widening gap in profitability.

Calculation(2023) – 3,972(Net Income)/90,155(Revenue)*100% = 4.41%

Calculation(2022) – 3,826(Net Income)/93,512(Revenue)*100%= 4.09%

Operating Profit Margin

For FedEx, the operating profit margin decreased from 6.67% in 2022 to 5.45% in
2023, a decline of 1.23 percentage points. In comparison, UPS demonstrated a higher operating
profit margin of 10.14% in 2023, despite also declining from 13.13% in 2022. Notably, FedEx
ranked #1 in the fourth quarter for operating profit margin within the transportation and logistics
industry, emphasizing its strong performance in that period.

Calculation(2023) – - 4,912(Operating Income)/90,155(Revenue)*100=5.45%

Calculation(2022) – 6,245(Operating Income)/93,512(Revenue)*100 = 6.67%

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Return on Equity (ROE)

For FedEx, the ROE slightly decreased from 15.34% in 2022 to 15.23% in 2023,
indicating stable returns for equity holders. However, UPS significantly outperformed FedEx
with an ROE of 38.76% in 2023, though it declined from 58.36% in 2022. When compared to
the industry average, FedEx's ROE of 15.23% in 2023 is below the 27.68% industry
benchmark, highlighting room for improvement.

Calculation(2023) – 3,972(Net Income)/26,088(Book Value Of Equity) *100%= 15.23%

Calculation(2022) – 3,826(Net Income)/24,939(Book Value Of Equity) *100% = 15.34%

Return on Assets (ROA)

FedEx's ROA increased slightly from 4.45% in 2022 to 4.56% in 2023, demonstrating
marginal improvement in asset utilization. In comparison, UPS posted a significantly higher
ROA of 9.47% in 2023, despite a sharp drop from 16.24% in 2022. FedEx's ROA remains well
below UPS's figures, showing less effective asset deployment.

Calculation(2023) - 3,972(Net Income)/87,143(Total Assets)*100% = 4.56%

Calculation(2022) - 3,826(Net Income)/85,994(Total Assets)*100% = 4.45%

4.3 Leverage Analysis

Debt to Equity Ration included in Analysis of financial statements part one.

The equity multiplier, which reflects the degree of financial leverage, decreased for
FedEx from 3.45 in 2022 to 3.34 in 2023. This indicates a slight reduction in reliance on debt
financing, with a higher proportion of assets being financed through equity. By comparison, UPS
reported higher equity multipliers of 4.09 in 2023 and 3.59 in 2022, while the industry averages
were 4.81 in 2023 and 4.49 in 2022, suggesting that FedEx’s leverage is relatively conservative
within its sector, meaning that FedEx relies less on debt and more on equity to finance its assets,
reducing financial risk compared to peers with higher leverage.

Calculation(2023) - 87,143(Total Assets)/26,088(Total Equity)= 3.34

Calculation(2022) - 85,994(Total Assets)/24,939(Total Equity)= 3.45

FedEx’s debt-to-capital ratio, which measures the proportion of debt in the company’s
capital structure, improved marginally, declining from 0.45 in 2022 to 0.44 in 2023, meaning
that the company is less burdened by debt obligations, making it more resilient during economic
downturns, making it more attractive to lenders. This is lower than UPS’s ratios of 0.56 in 2023

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and 0.50 in 2022, as well as the industry averages of 0.59 in 2023 and 0.57 in 2022, reflecting a
more balanced approach to financing.

Calculation(2023) - $20,579(Total Debt)/$20,579(Total Debt)+26,088(Total Equity) = 0.44

Calculation(2022) - 20,264(Total Debt)/24,939(Total Debt)+20,264(Total Equity)= 0.45
4.4 Liquidity Analysis
Cash ratio included in financial analysis part two.

FedEx’s current ratio, an indicator of its ability to cover short-term obligations,

decreased from 1.43 in 2022 to 1.37 in 2023. While still above UPS’s ratios of 1.22 in 2022 and
1.10 in 2023, the decline suggests slightly reduced liquidity. But for many industries current
ratio from above 1 is considered healthy, indicating that FedEx has enough current assets to
cover its short-term obligations, which reflects its ability to handle unexpected expenses.

Calculation(2023) - 18,610(Current Assets)/13,586(Current Liabilities) = 1.37

Calculation(2022) - 20,365(Current Assets)/14,274(Current Liabilities)= 1.43

The quick ratio, which excludes inventory and prepaid expenses to assess immediate
liquidity, also declined slightly for FedEx, falling from 1.31 in 2022 to 1.25 in 2023. Despite
this, FedEx’s quick ratio is higher than UPS’s, which dropped to 0.98 in 2023 from 1.22 in 2022.
FedEx ranked #2 in the transportation and logistics sector for quick ratio in 2023, indicating
strong short-term financial health.

Calculation(2023) - 18,610(Current Assets)-604(Inventory)-962(Prepaid

Expenses)/13,586(Current Liabilities) = 1.25
Calculation(2022)-20,365(Current Assets)-637(Inventory)-968(Prepaid
Expenses)/14,274(Current Liabilities) = = 1.31

4.5 Market Value Analysis

FedEx’s price-to-earnings (P/E) ratio decreased from 15.45 in 2022 to 13.97 in 2023,
reflecting a decline in investor valuation. Comparatively, UPS recorded higher P/E ratios of
19.97 in 2023 and 13.02 in 2022, while the broader industry saw a significant drop in its P/E
ratio from 36.38 in 2022 to 25.76 in 2023. Despite the industry decline, FedEx's P/E ratio
remains below the industry average, indicating it is less favorably valued by investors compared
to its peers.

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Calculation(2023) - 217.98(Price)/15.60(EPS)= 13.97 - EPS taken directly from Income
Statement.
Calculation(2022) - 224.58(Price)/14.54(EPS) = 15.45

The company’s market-to-book ratio, which measures market valuation relative to book
value, declined by 5.24%, from 2.17 in 2022 to 1.97 in 2023. The decline indicates that
investors have less faith in FedEx's potential for expansion or financial success. The decline in
market capitalization indicates that investors are placing a lower value on the company, even
though its book value (or actual equity) increased marginally. This implies that the market's
perception of FedEx grew more pessimistic even though the company's value did somewhat
improve.

Calculation(2023) - 51 409(Market Capitalization)/26,088(Book value of Equity) = 1.97

Calculation(2022) - 54 254(Market Capitalization)//24,939(Book value of Equity) = 2.17

5. Conclusions and Recomendations

This part of the report includes possible strategies and reccomendations for FedEx to
improve its profitability, revenue streams, improving liquidity and enhancing its competitive
positioning. Provided strategies will help FedEx to face its challenges in revenue growth, cost
management and operational efficiency, while focusing on customer expectations. Further
recommmendations derive from the detailed analysis of FedEx’s financial data. In 2023
company’s operating margin decreased to 5.45 % from 6.67% from 2022, Because of this FedEx
must strengthen its cost-saving efforts and improve yield management. Company can optimize
its cost structure with DRIVE and Network 2.0 initiatives, mentioned in financial report.
Company plans to save $6 billion in 2027 fiscal year through this initiatives, which is crucial.
However, benefits of these programs are not yet materialized, based on that our suggestion is
accelerating implementation of these initiatives to enhance operational efficiency. For example,
Automating sorting facilities and delivery networks can reduce labor and fuel costs, which are
two of the biggest expenses for FedEx, particularly in 2023 they accounted for $36 billion.
Another suggestion is to improve yield management and revenue through adjusting prices.
Investion in dynamic pricing models will optimize yields in time-sensitive FedEx Express
services. This segment is highly price-sensitive and accurate pricing adjustments can increase
profitability even with reduced volumes. Also, FedEx;s route optimization technology , which
uses machine learning and real-time data, has already helped with efficieny. FedEx should
expand these capabilities and further reduce delivery times and fuel consumption, by that
company can enhance efficiency and customer satisfaction rate. What is more, company must
diversify its market presence and make innovative innitiatives to drive up revenues, because as
reported, company had a 3.59% decline in revenue in 2023. fedEx can strengthen its precense in

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emerging markets, like South America , because these markets provide important opportunities
for growth. By froming partnerships with local delivery operators, FedEx can enter markets
cost-effectively and expand its market share. To drive up revenue another initiative is to provide
premium services and by that attract businesses willing to pay more money for superior service
quality. Besides, FedEx implemented Sustainablity Insights platform , which tracks emissions,
has a potential to become another revenue generating tool. By disclosing information about
carbon emissions to corporate customers , FedEx can appeal other businesses, that favor
sustainable business practices.
When it comes to liquidity, FedEx lags behind UPS(United Parcel Services), because of
that enhancing liquidity and optimizing cash flows are crucial. In 2023 FedEx improved its Day
Sales Outstanding(DSI) to 41.57 days from 46.65 in 2022, showing better receivable
management. Company should maintain this position and ensure consistent cash inflows to
support day-to-day operations and investments. FedEX’s FCF(Free Cash Flow) declined from
2022, because of high investments in Capital Expanditures. Comoany should prioritize high-
return capital investments, For example in automation and digital transformation. FedEx needs to
regulate its spending to maintain sufficient cash balances for shareholder returns and debt
reduction. FedEx’s Debt-to_Equity ratio has declined from 2022, highlighting its reliance on
equity. Company can enhance its resilience during possible economic downturns and market
fluctuations by reducing dependence on debt. With that strategy FedEx can attract investors who
are seeking stability. When it comes to ROE and operating margin FedEX underperforms
compared to its main competitor,UPS. One initiative is to analyse UPS’s cost management and
operational strategies to identify ways for improvement and close the gap. Further
recommendations include heavy marketing investments. FedEx should emphasize its innovation
and commitment to sustainable oractices in marketing campaigns. Company can highlight
benefits of the DRIVE and Network 2.0 programs. Besides company should think about
retaining its existing customers along with gaining new ones to sustain revenue streams.
Differentiation itself with delivery speed and accuracy from hey competitors are essential to
maintain customer loyalty and satisfaction rate. Also, maintaining high service levels in FedEx
express and Ground segment will help sustain existing customers. To conclude, firstly fedEx
should prioritize cost-saving programs , because operating margins are declining despite ongoing
cost-saving efforts. Secondly, focus on Emergin markets, Revenue growth in established markets
has decreased and company should look for other opportunities in different markets. FedEx has
to improve sustainable initiatives , beceuse nowadays customers are demanding transoarency and
environmental responsibiolity. By implementing these recommendations, FedEx can improve its
financial position , strengthen operational efficiency and secure a competitive advantage in
changing logistics secotr. These strategies will establish sustainable growth and long-term
profitability, which aligns to FedEx’s business objectives.

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6. Appendices

Appendix 1:

Appendix 2:

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