FedEx Corporation (FDX)
Financial leverage ratio
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 87,007,000 | 86,114,000 | 88,051,000 | 87,576,000 | 87,143,000 | 85,775,000 | 85,591,000 | 85,826,000 | 85,994,000 | 84,108,000 | 84,247,000 | 82,048,000 | 82,777,000 | 82,793,000 | 81,156,000 | 77,648,000 | 73,537,000 | 70,014,000 | 69,954,000 | 68,452,000 |
| Total stockholders’ equity | US$ in thousands | 27,582,000 | 26,375,000 | 26,766,000 | 26,534,000 | 26,088,000 | 24,733,000 | 24,115,000 | 25,140,000 | 24,939,000 | 24,526,000 | 24,940,000 | 24,321,000 | 24,168,000 | 21,981,000 | 21,039,000 | 19,462,000 | 18,295,000 | 18,831,000 | 18,659,000 | 18,166,000 |
| Financial leverage ratio | 3.15 | 3.26 | 3.29 | 3.30 | 3.34 | 3.47 | 3.55 | 3.41 | 3.45 | 3.43 | 3.38 | 3.37 | 3.43 | 3.77 | 3.86 | 3.99 | 4.02 | 3.72 | 3.75 | 3.77 |
May 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $87,007,000K ÷ $27,582,000K
= 3.15
The financial leverage ratio of FedEx Corporation has shown some fluctuations over the past few years, ranging from 3.15 to 4.02. The ratio measures the extent to which the company relies on debt financing relative to its equity. A higher ratio indicates higher financial leverage, suggesting that the company is relying more on debt to finance its operations and growth.
FedEx's financial leverage ratio has generally been on the higher side, indicating a significant level of debt in its capital structure. This can be both advantageous and risky. On the positive side, debt can help magnify returns for shareholders during favorable economic conditions. However, excessive debt levels can also increase financial risk, especially during economic downturns or periods of rising interest rates.
The upward trend in the financial leverage ratio observed until around mid-2021 may imply that FedEx was increasing its reliance on debt financing. The subsequent decrease in the ratio from mid-2021 to early 2022 suggests a potential shift in the company's capital structure or a reduction in debt levels. However, the ratio began to rise again in late 2022 and continued to fluctuate through 2024.
Overall, careful monitoring and management of the financial leverage ratio are essential for FedEx to strike a balance between leveraging debt for growth opportunities and maintaining a healthy level of financial risk within its operations.