Fedex Analysis Essay Example | Topics and Well Written Essays - 1000 words

Fedex Analysis - Essay Example Shareholders expressed their dissatisfaction, in the latest shareholders meeting, on effectiveness of management of the company’s resources. The shareholders are justified in their opinion because even though the company reported strong profitability ratios, its activity rations are very weak. Activity ratios such as days of sales receivables, days of sales in inventory, accounts receivables turnover, inventory turnover, and asset turnover ratio are too weak to warrant dissent opinion from shareholders. Ratios such as return on assets and profitability ratios are however high and should be appreciated. The company’s management of its resources is worse than that of its main competitor, FedEex, because its ratios are worse than ratios that FedEx posted on activity. In days sales receivables, for example, UPS reported values higher 300 days in its considered periods while FedEex reported 43.31 days. In order to improve the company’s situation, I can ensure implemen tation of effective marketing strategies for better turnover and introduce new policies for credit sales. As a loans officer for a commercial lender, I would approve the company’s request for a loan. I would concur with the company’s position that its stock is undervalued because of the unjustified shareholders’ opinion on the company, which may be shared by potentials investors to have adverse effects on the company’s stock prices. In addition, the buyback may improve value of its stock. Taken as a short-term loan, it will reduce strength of the company’s current ratio and quick ratio because of increased value of current liabilities when current assets remain constant. If taken as a long-term loan then it will worsen the company’s debt ratio that is already weak, below 1.0. Debt to equity ratio, which is already weak, will worsen because while the load will increase the