FedEx Corporation (FDX)
Return on total capital
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 6,581,000 | 6,057,000 | 5,585,000 | 7,467,000 | 2,341,000 |
| Long-term debt | US$ in thousands | — | — | — | — | 0 |
| Total stockholders’ equity | US$ in thousands | 27,582,000 | 26,088,000 | 24,939,000 | 24,168,000 | 18,295,000 |
| Return on total capital | 23.86% | 23.22% | 22.39% | 30.90% | 12.80% |
May 31, 2024 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $6,581,000K ÷ ($—K + $27,582,000K)
= 23.86%
FedEx Corporation's return on total capital has shown a positive trend over the past five years, indicating the company's ability to generate returns relative to the total capital invested. The return on total capital was 23.86% in 2024, compared to 23.22% in 2023, and 22.39% in 2022, reflecting a consistent improvement in efficiency and profitability.
The significant increase in the return on total capital from 2019 (12.80%) to 2021 (30.90%) suggests that the company was able to deploy its capital more effectively during that period, resulting in higher returns for shareholders. However, there was a slight decrease in 2023 compared to the previous year, which could indicate a temporary slowdown in performance or a shift in the company's capital structure.
Overall, FedEx Corporation's ability to generate returns on its total capital above 20% in most years indicates strong operational performance and effective capital utilization. Investors and stakeholders may view this positively as it demonstrates the company's efficiency in generating profits relative to the capital invested.