FedEx Corporation (FDX)
Liquidity ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 1.19 | 1.36 | 1.37 | 1.43 | 1.51 |
| Quick ratio | 1.09 | 1.27 | 1.28 | 1.31 | 3.17 |
| Cash ratio | 0.36 | 0.51 | 0.53 | 0.48 | 2.29 |
The liquidity position of FedEx Corporation, as reflected by its key ratios over the period from May 31, 2021, to May 31, 2025, indicates a consistent decline across all measures.
The current ratio, which assesses the company's ability to meet short-term obligations with its current assets, decreased from 1.51 in 2021 to 1.19 in 2025. This gradual decline suggests a diminishing buffer of current assets relative to current liabilities, potentially signaling increased liquidity risk or a change in working capital management.
Similarly, the quick ratio, excluding inventory from current assets to measure more liquid assets, showed a significant reduction from 3.17 in 2021 to 1.09 in 2025. This indicates a declining capacity to cover short-term liabilities using the most liquid assets, heightening concerns regarding immediate liquidity.
The cash ratio, which considers only cash and cash equivalents relative to current liabilities, experienced a steep drop from 2.29 in 2021 to 0.36 in 2025. The sharp decrease points to a substantial reduction in cash holdings relative to current obligations, which could impact the company's ability to quickly respond to short-term financial demands.
Overall, the trend across all liquidity ratios suggests a steady erosion of liquidity buffers for FedEx over the observed period. While ratios above 1 generally indicate a buffer for meeting short-term liabilities, the declining figures—particularly the cash ratio—highlight increasing reliance on non-cash current assets and potential vulnerabilities in immediate liquidity.
See also:
Additional liquidity measure
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 29.75 | 28.31 | 24.57 | 29.42 | 34.47 |
The analysis of FedEx Corporation’s cash conversion cycle (CCC) over the period from May 31, 2021, to May 31, 2025, reveals a general trend of improvement followed by a slight increase in recent years.
As of May 31, 2021, the CCC stood at 34.47 days, indicating the number of days it took for the company to convert its investments in inventory and other resources into cash flows from sales. This period decreased to 29.42 days by May 31, 2022, reflecting operational efficiencies or improvements in receivables collection, inventory management, or payables period. The downward trend continued into 2023, with the CCC reaching a low of 24.57 days, which suggests that FedEx became more efficient at managing its working capital cycle during this period, potentially due to optimized logistics, better receivables management, or extended payables.
However, the subsequent data indicates a slight reversal of this trend. By May 31, 2024, the CCC increased to 28.31 days, and further to 29.75 days by May 31, 2025. This increase may suggest some operational adjustments, external economic factors, or strategic changes that resulted in longer durations to convert investments into cash. Despite this uptick, the CCC remained lower than the levels observed in 2021, signaling an overall improvement in cash conversion efficiency over the analyzed period.
In summary, FedEx's cash conversion cycle demonstrated notable improvement from 2021 through 2023, reflecting enhanced operational efficiencies. The slight post-2023 increase indicates some challenges or strategic shifts but does not negate the overall trend toward shorter cycle durations, which is indicative of better working capital management and increased operational agility over the analyzed timeframe.