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Microsoft Excel LibreOffice Calc


Analysis of Debt

Difficulty: Advanced


Debt Accounting Policy

CAPITALIZED INTEREST

Interest on funds used to finance the acquisition and modification of aircraft, including purchase deposits, construction of certain facilities, and development of certain software up to the date the asset is ready for its intended use, is capitalized and included in the cost of the asset if the asset is actively under construction. Capitalized interest was $61 million in 2018, $41 million in 2017 and $42 million in 2016.

Source: 10-K (filing date: 2018-07-16).


Total Debt (Carrying Amount)

FedEx Corp., Statement of Financial Position, Debt

USD $ in millions

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Current portion of long-term debt hidden hidden hidden hidden hidden hidden
Long-term debt, less current portion hidden hidden hidden hidden hidden hidden
Total long-term debt (carrying amount) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

Item Description The company
Total long-term debt (carrying amount) Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. FedEx Corp.'s total debt increased from 2016 to 2017 and from 2017 to 2018.

Total Debt (Fair Value)

Microsoft Excel LibreOffice Calc
May 31, 2018
Selected Financial Data (USD $ in millions)
Long-term debt, exclusive of capital leases hidden
Capital lease obligations hidden
Total long-term debt (fair value) hidden
Ratio
Debt, fair value to carrying amount hidden

Based on: 10-K (filing date: 2018-07-16).


Weighted-average Interest Rate on Debt

Weighted average interest rate on long-term debt: hidden

Interest Rate Debt Amount1 Interest Rate × Debt Amount Weighted-average Interest Rate2
hidden hidden hidden
Total hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16).

1 USD $ in millions

2 Weighted-average interest rate = 100 × hidden ÷ hidden = hidden


Interest Costs Incurred

FedEx Corp.

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Interest expense hidden hidden hidden hidden hidden hidden
Capitalized interest hidden hidden hidden hidden hidden hidden
Interest costs incurred hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

Item Description The company
Interest expense Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. FedEx Corp.'s interest expense increased from 2016 to 2017 and from 2017 to 2018.
Capitalized interest The amount of interest that was capitalized during the period. FedEx Corp.'s capitalized interest declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. FedEx Corp.'s interest costs incurred increased from 2016 to 2017 and from 2017 to 2018.

Adjusted Interest Coverage Ratio

Microsoft Excel LibreOffice Calc
May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015 May 31, 2014 May 31, 2013
Selected Financial Data (USD $ in millions)
Net income hidden hidden hidden hidden hidden hidden
Add: Income tax expense hidden hidden hidden hidden hidden hidden
Add: Interest expense hidden hidden hidden hidden hidden hidden
Earnings before interest and tax (EBIT) hidden hidden hidden hidden hidden hidden
 
Interest costs incurred hidden hidden hidden hidden hidden hidden
Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)1 hidden hidden hidden hidden hidden hidden
Adjusted interest coverage ratio (including capitalized interest)2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-07-16), 10-K (filing date: 2017-07-17), 10-K (filing date: 2016-07-18), 10-K (filing date: 2015-07-14), 10-K (filing date: 2014-07-14), 10-K (filing date: 2013-07-15).

2018 Calculations

1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense
= hidden ÷ hidden = hidden

2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). FedEx Corp.'s adjusted interest coverage ratio improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.