Stock Analysis on Net

FedEx Corp. (NYSE:FDX)

$24.99

Analysis of Debt

Microsoft Excel

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Total Debt (Carrying Amount)

FedEx Corp., balance sheet: debt

US$ in millions

Microsoft Excel
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Current portion of long-term debt
Long-term debt, less current portion
Total long-term debt, including current maturities (carrying amount)

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).


Current portion of long-term debt

The current portion of long-term debt exhibited significant fluctuations over the examined period. It started relatively high at 964 million USD in 2019, sharply dropping to 51 million USD in 2020. Subsequently, it increased to 146 million USD in 2021, then declined again to 82 million USD in 2022. The figure rose to 126 million USD in 2023 before falling to 68 million USD in 2024. Overall, this category shows no clear upward or downward trend but rather cyclic volatility, with values generally remaining below 150 million USD after 2019.

Long-term debt, less current portion

This segment demonstrated a notable increase from 16,617 million USD in 2019 to a peak of 21,952 million USD in 2020. Following this peak, there was a steady decline to 20,733 million USD in 2021, continuing downward to 20,182 million USD in 2022. The value then increased slightly to 20,453 million USD in 2023 before slightly decreasing again to 20,135 million USD in 2024. The data indicate a significant rise in 2020, followed by a relatively stable trend around the low 20,000 million USD range thereafter.

Total long-term debt, including current maturities (carrying amount)

The total long-term debt, encompassing both current and non-current portions, largely mirrors the trends seen in the separate components. It increased from 17,581 million USD in 2019 to 22,003 million USD in 2020, which is the highest point in the series. Afterward, it decreased consistently to 20,879 million USD in 2021 and further to 20,264 million USD in 2022. The total debt rose slightly to 20,579 million USD in 2023 then decreased again to 20,203 million USD in 2024. This pattern suggests that 2020 was an exceptional year for elevated long-term debt levels, with subsequent relative stabilization around 20,000 million USD.


Total Debt (Fair Value)

Microsoft Excel
May 31, 2024
Selected Financial Data (US$ in millions)
Long-term debt, including current maturities and exclusive of finance leases
Finance lease obligations
Total long-term debt, including current maturities (fair value)
Financial Ratio
Debt, fair value to carrying amount ratio

Based on: 10-K (reporting date: 2024-05-31).


Weighted-average Interest Rate on Debt

Weighted average interest rate on long-term debt:

Interest rate Debt amount1 Interest rate × Debt amount Weighted-average interest rate2
Total

Based on: 10-K (reporting date: 2024-05-31).

1 US$ in millions

2 Weighted-average interest rate = 100 × ÷ =


Interest Costs Incurred

FedEx Corp., interest costs incurred

US$ in millions

Microsoft Excel
12 months ended: May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Interest expense
Capitalized interest
Interest costs incurred

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).


Interest Expense
The interest expense shows an overall upward trend from May 31, 2019, to May 31, 2024. Beginning at $588 million in 2019, the expense increased steadily to a peak of $793 million in 2021. A decline was observed in 2022, lowering the expense to $689 million, followed by a slight rise in 2023 to $694 million and a further increase to $745 million in 2024. Despite fluctuations, the interest expense in 2024 is significantly higher than in 2019.
Capitalized Interest
Capitalized interest demonstrates moderate variability over the reported years. The value starts at $64 million in 2019 and decreases to $54 million in 2020. It then increases to $68 million in 2021, followed by a slight decline to $62 million in 2022. The trend reverses with steady growth to $77 million in 2023 and $81 million in 2024. The overall pattern indicates fluctuating capitalized interest with growth during the most recent years.
Interest Costs Incurred
Total interest costs incurred, which combine interest expense and capitalized interest, reflect a general upward movement during the period. In 2019, the costs were $652 million, rising to $726 million in 2020 and reaching a peak of $861 million in 2021. This was followed by a decline to $751 million in 2022 and a slight increase to $771 million in 2023. The costs further increased to $826 million in 2024. Despite short-term decreases, the overall trajectory is positive, indicating growing interest costs over time.
Summary
The data indicates an overall increase in both interest expense and total interest costs incurred over the six-year period, despite some interim fluctuations. Capitalized interest shows variability, but with a tendency to rise in the latter years. The peak in total interest costs occurred in 2021, followed by a temporary dip, and resumed its upward movement through 2024. These trends suggest a rising cost of debt financing or an increase in borrowing levels, which may impact the company’s financial leverage and interest burden going forward.

Adjusted Interest Coverage Ratio

Microsoft Excel
May 31, 2024 May 31, 2023 May 31, 2022 May 31, 2021 May 31, 2020 May 31, 2019
Selected Financial Data (US$ in millions)
Net income
Add: Income tax expense
Add: Interest expense
Earnings before interest and tax (EBIT)
 
Interest costs incurred
Financial Ratio With and Without Capitalized Interest
Interest coverage ratio (without capitalized interest)1
Adjusted interest coverage ratio (with capitalized interest)2

Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).

2024 Calculations

1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =

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


Interest Coverage Ratio (without capitalized interest)
The interest coverage ratio demonstrates a significant upward trend from 2.11 in 2019 to a peak of 9.42 in 2021. Post-2021, the ratio sees a slight decline but remains elevated, stabilizing around 8.7 to 8.8 through 2023 and 2024. This indicates an improved ability to meet interest obligations over the period, suggesting stronger operational earnings relative to interest expense.
Adjusted Interest Coverage Ratio (with capitalized interest)
Similarly, the adjusted interest coverage ratio follows a comparable pattern, increasing from 1.91 in 2019 to a high of 8.67 in 2021. After this peak, there is a moderate decline with values fluctuating between 7.44 and 7.97 from 2022 to 2024. Although slightly lower than the non-adjusted ratio, it also indicates a marked improvement in covering interest costs, reflecting increased earnings before interest when capitalized interest is included.
Overall Insight
Both ratios show marked improvement in the company's ability to cover interest expenses over the six-year span, with particularly notable increases occurring between 2019 and 2021. The ratios taper slightly but remain significantly higher than the initial years, suggesting sustained financial health and reduced risk related to interest payments. The close alignment of the adjusted and unadjusted ratios indicates that capitalized interest has a consistent, moderate impact on these measures, but does not alter the overall positive trend.