FedEx Corporation (FDX)
Cash conversion cycle
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 5.74 | 7.93 | 7.77 | 7.71 | 7.19 | 5.37 | 5.55 | 5.48 | 5.53 | 5.74 | 5.68 | 5.73 | 6.07 | 8.12 | 8.71 | 9.15 | 8.16 | 8.09 | 7.51 | 6.84 |
| Days of sales outstanding (DSO) | days | 42.34 | 41.64 | 44.62 | 42.38 | 41.57 | 42.57 | 45.50 | 42.90 | 46.65 | 47.06 | 50.38 | 47.52 | 53.22 | 53.21 | 55.77 | 53.65 | 53.28 | 48.85 | 51.22 | 48.77 |
| Number of days of payables | days | 29.80 | 46.86 | 49.18 | 46.33 | 45.83 | 33.90 | 33.79 | 35.33 | 35.02 | 39.36 | 40.08 | 37.98 | 39.70 | 55.58 | 55.39 | 51.49 | 46.62 | 45.50 | 42.80 | 37.87 |
| Cash conversion cycle | days | 18.28 | 2.71 | 3.20 | 3.76 | 2.93 | 14.03 | 17.27 | 13.06 | 17.17 | 13.45 | 15.98 | 15.27 | 19.58 | 5.76 | 9.09 | 11.31 | 14.81 | 11.44 | 15.92 | 17.74 |
May 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.74 + 42.34 – 29.80
= 18.28
The cash conversion cycle of FedEx Corporation has shown fluctuating trends over the recent periods. The cycle measures how efficiently the company manages its working capital regarding the time it takes to convert cash spent on inventory into cash inflows from sales.
The average cash conversion cycle for FedEx Corporation over the periods provided is approximately 11.81 days. This indicates that, on average, it takes FedEx 11.81 days to convert its investments in production and sales back into cash.
Analyzing the individual data points, we can observe significant variability in the cash conversion cycle. For example, in some quarters, such as in May 2024 and May 2021, the cycle was notably longer at 18.28 days and 19.58 days, respectively. This suggests that the company took a longer time to convert its investments into cash during those periods.
Conversely, in February 2024 and August 2020, the cash conversion cycle was relatively shorter at 2.71 days and 9.09 days respectively. A shorter cycle indicates that the company efficiently managed its working capital and quickly converted investments into cash inflows.
The trends in the cash conversion cycle may be influenced by various factors such as changes in sales volume, inventory management, payment terms with suppliers, and efficiency in collecting accounts receivable. It is important for FedEx Corporation to closely monitor and manage its cash conversion cycle to ensure optimal utilization of its working capital and maintain liquidity.