Blog Entry 4: Financial Statements

This past week in class we discussed financial statements and some of the trends to look out for when analyzing a company’s balance sheet or their income statements. Financial statements show how the company has done over the past few years in regards to the amount of money being brought in and the costs to produce those services. The company that I analyzed was FedEx Corporation. One of the first things that jumped out to me is that their revenues for 2012 were $42,680,000,000 and this is a nine percent increase from 2011. In 2008, their revenue totaled about 38 billion dollars and in 2009 it totaled about 35.5 billion. In 2010, their revenue continued to dip to roughly 34.7 billion before making a jump to 39.3 billion dollars in 2011. This is a direct result of the economic recession that occurred during this downward trend. Since FedEx is such a large company and brings in so much revenue, it relies on the economy to do well so when things are in good shape then their business is booming. This could be considered both a strength and a weakness. They are affected on a global level since they rely on business overseas. Revenue numbers do not really mean anything unless your company brings in operating income in positive ways.  The jump in the year 2012 can be attributed to an increased demand for importing goods and services such as FedEx. Operating income also stands out and made a thirty-four percent increase in 2012 to a little over $3,186,000,000. What this tells us is that this company is improving year-to-year and has managed to survive some setbacks due to the economy and continue to improve. Their total net income for 2012 was $2,032,000,000 which was a forty percent increase from 2011. This amount represents the total amount of money that the company keeps when all is said and done and taxes and costs are subtracted. The operating margin percentage for 2012 was 7.5 % which is up from 6.1% in 2011. Another interesting statistic is that their cash/cash equivalents total about 2.8 billion so they could easily pay back what they owe in debt and still come out ahead since their debt was roughly 1.6 billion. One of the main strengths of FedEx is their ability to adapt well to changes and become more efficient with how they make money. They are very well-managed and organized and as a result have been able to spend less money to provide services and take in more money for the company. This is impressive considering all of the costs regarding their transportation services and the cost of fuel and airplanes. One of their other weaknesses is that they are vulnerable to oil prices and when these prices go up, then their operating income and operating margin goes down. I would definitely invest $1,000 dollars into this company because of their ability to adapt to change and recover. Since this is such a large company with a huge global following, there will constantly be some type of demand for their services. The numbers show that they continue to make billions of dollars and all signs indicate continued growth.

 

 FedEx Corporation (2012). Retrieved from http://www.google.com/finance?q=NYSE%3AFDX&ei=J8tMUPj-HJOilwPBHA

Burrows, D. (2012, September 5). Fedex profit warning is no surprise. Retrieved from http://www.investorplace.com/2012/09/fedex-profit-warning-is-no-surprise-fdx/

(2012). Fedex, pga tour extend partnership. (2012). [Print Photo]. Retrieved from http://video.cnbc.com/gallery/?video=3000074653

Fedex annual report 2012. (n.d.). Retrieved from http://fedexannualreport2012.hwaxis.com/Files/FedEx_Annual_Report_2012_Financials.pdf

 

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2 thoughts on “Blog Entry 4: Financial Statements

  1. Just like you stated, the large number of their revenue in 2012 is outrageous compared to the years before. You can tell that FedEx is on a steady rise since over the past years their revenue is still increasing by 3-4%. You can tell that his organization is very well run, due to the fact that their numbers kept improving even through the economic recession that our country has been going through. I also agree with you by investing my $1000 dollars within this organization. It has proven that is can continue to grown and the statistics clearly show this.

  2. It definitely seems like FedEx is on a rebound since the economy is doing better since the recession. Their bounce back and continued growth since the recession, especially from 2011 to 2012. An increase of 34% in operating income and a 40% increase in total net income both since 2011 is phenomenal. FedEx’s ability to adapt to change, becoming more efficient to make money by spending less money to provide services, and being well managed in order to be successful. All of those points would be enough for me to invest $1,000 if I had it.

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