FedEx Corporation (FDX)

Short-term

Turnover ratios

The activity ratios of FedEx Corporation, as derived from the provided data, reveal several insights into the company's operational efficiency over multiple reporting periods.

Inventory Turnover:
The inventory turnover ratio demonstrates a generally high level of inventory efficiency, fluctuating within a narrow range from approximately 96.77 times on August 31, 2020, to a peak of about 118.96 times on November 30, 2021. This high turnover indicates rapid inventory utilization, consistent with the logistics and express delivery nature of FedEx's operations. After reaching the peak in late 2021, the ratio experienced a slight decline until around February 2024, where it stabilized in the vicinity of 105.32 to 111.19. This decline may suggest either a temporary accumulation of inventory or adjustments in operational process efficiencies, with a subsequent modest recovery toward late 2024.

Receivables Turnover:
The receivables turnover ratio exhibits a steady, gradual increase from approximately 6.80 times on August 31, 2020, to around 8.85 times in May 2023. This trend indicates an improving efficiency in collecting receivables, reducing the average collection period and enhancing cash flow management. The ratio remains relatively stable post-2021, oscillating between roughly 8.14 and 8.84 times, which points to sustained receivables management efficiency within this period.

Payables Turnover:
The payables turnover ratio fluctuates around an average of roughly 17 to 18 times during most of the analyzed periods, with notable deviations, especially a significant increase to 21.23 times as of May 2024, suggesting a shorter period for settling payables and possibly leveraging supplier terms more aggressively. Prior to this peak, the ratio varied primarily between 17 and 18 times. The ratio's erratic movements could reflect changes in payment strategy, supplier negotiations, or liquidity considerations.

Working Capital Turnover:
This ratio exhibits notable variability, with an increasing trend over time from approximately 9.27 times on August 31, 2020, to a peak of about 29.42 times on May 31, 2025. The rising trend indicates an increasing efficiency in generating sales from working capital, potentially driven by optimized asset utilization or operational scaling. Periods such as August 2020 and early 2021 suggest moderate operational efficiency, while the significant increases from late 2021 onward point toward enhanced working capital management, possibly through better receivables collection, inventory management, or a combination of such factors.

Overall Summary:
The activity ratios collectively suggest that FedEx has maintained high inventory turnover, indicating efficient management of inventory levels in line with the logistics operations. Receivables turnover improvement signifies stronger credit and collection policies, leading to quicker cash inflows. The fluctuations in payables turnover suggest strategic or operational shifts in payment timing, which may impact liquidity and supplier relationships. The notable upward trend in working capital turnover reflects an overall improvement in operational efficiency and asset utilization over the examined period.

These ratios, analyzed in totality, point to an organization that has progressively optimized its operational cycle, though periodic fluctuations imply adjustments in response to internal strategies or external market conditions.

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Average number of days

The activity ratios for FedEx Corporation, as reflected in the provided data, demonstrate various trends over the analyzed period, primarily focusing on inventory management, receivables collection, and payables management.

Days of Inventory on Hand (DOH):
From August 2020 through November 2024, FedEx’s inventory turnover ratio has shown a consistent downward trend, decreasing from 3.77 days to approximately 3.34 days. This indicates that the company has been maintaining a relatively stable yet slightly improving inventory efficiency, with its inventory being held for a shorter duration over time. The slight increase to 3.40 days in November 2024 might suggest a temporary increase in inventory levels or changes in operations, but overall, the data points to an effective inventory management approach with a generally stable cycle.

Days of Sales Outstanding (DSO):
The receivables collection period has generally decreased from 53.65 days in August 2020 to approximately 42.52 days in February 2024. This decreasing trend suggests that FedEx has been progressively improving its collection efficiency, collecting receivables more quickly over time. The slight fluctuation around 42 to 44 days in subsequent periods indicates a relatively steady collection cycle, which benefits cash flow management and reduces receivables risk.

Number of Days of Payables:
The average number of days FedEx takes to pay its suppliers has displayed minor fluctuations but maintains a relatively stable pattern, ranging from about 17 days to just under 23 days. Notably, a reduction to approximately 17.19 days occurred in May 2024, which may indicate an acceleration in payment processing, possibly as part of operational adjustments or negotiations with suppliers. The consistency in payables days implies that FedEx balances maintaining supplier relationships with cash flow optimization.

Summary of Activity Ratios:
Overall, the activity ratios suggest a company that has gained efficiency in managing its receivables and inventory levels over the observed period. The shortening of days in receivables indicates improving cash collection processes, while the stable inventory days reflect effective inventory control. The manageable and relatively stable payables days demonstrate a balanced approach to supplier payments, reflecting sound liquidity management.

These trends are indicative of FedEx’s ongoing efforts to optimize operational efficiency, enhance liquidity, and maintain a stable working capital cycle. Continued improvements, especially in receivables collection, could further strengthen cash flow position, while maintaining inventory and payables management will support operational stability.

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See also:

FedEx Corporation Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

The long-term activity ratios for FedEx Corporation, specifically the Fixed Asset Turnover and Total Asset Turnover ratios, exhibit notable variations over the observed periods.

Fixed Asset Turnover began at a low of 1.47 in August 2020, with a subsequent significant increase to 2.16 by November 2020. This upward trend continued, peaking around February 2022 at approximately 2.45, indicating improved utilization of fixed assets relative to revenues. Throughout 2022, ratios remained relatively high, averaging approximately 2.44 in August. However, from late 2022 onwards, a declining trend is observable, with ratios falling to 1.50 by November 2023, suggesting a reduced efficiency in asset utilization or possible increased asset base not proportionally reflected in revenues.

Total Asset Turnover displayed a steady upward trajectory from 0.92 in August 2020 to a peak of 1.10 in early 2022, indicating better overall asset efficiency in generating sales during this period. Post-2022, the ratio shows some fluctuation, with a slight downward trend towards 1.01 by August 2023, and further decrease to 0.68 by May 2025. This decline signals a potential decrease in overall asset utilization efficiency, which may result from expansions of asset base, changes in revenue generation efficiency, or strategic shifts within the company's asset management.

Overall, the ratios suggest that FedEx experienced increasing efficiency in asset utilization during 2020–2022, followed by a period of declining efficiency into 2023 and beyond. This pattern may reflect operational adjustments, strategic investments, or external factors affecting asset productivity over time.

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See also:

FedEx Corporation Long-term (Investment) Activity Ratios (Quarterly Data)