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