Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

FedEx Corp. (NYSE:FDX)

Financial Reporting Quality: Aggregate Accruals

Advanced level

Earnings can be decomposed into cash and accrual components. The accrual component (aggregate accruals) has been found to have less persistence than the cash component, and therefore (1) earnings with higher accrual component are less persistent than earnings with smaller accrual component, all else equal; and (2) the cash component of earnings should receive a higher weighting evaluating company performance.


Balance-Sheet-Based Accruals Ratio

FedEx Corp., balance sheet computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Operating Assets
Total assets 73,537  54,403  52,330  48,552  46,064  37,069 
Less: Cash and cash equivalents 4,881  2,319  3,265  3,969  3,534  3,763 
Operating assets 68,656  52,084  49,065  44,583  42,530  33,306 
Operating Liabilities
Total liabilities 55,242  36,646  32,914  32,479  32,280  22,076 
Less: Current portion of long-term debt 51  964  1,342  22  29  19 
Less: Long-term debt, less current portion 21,952  16,617  15,243  14,909  13,838  7,249 
Operating liabilities 33,239  19,065  16,329  17,548  18,413  14,808 
 
Net operating assets1 35,417  33,019  32,736  27,035  24,117  18,498 
Balance-sheet-based aggregate accruals2 2,398  283  5,701  2,918  5,619  — 
Financial Ratio
Balance-sheet-based accruals ratio3 7.01% 0.86% 19.08% 11.41% 26.37%
Benchmarks
Balance-Sheet-Based Accruals Ratio, Competitors4
CSX Corp. -0.30% 0.44% 17.24% 4.82%
Norfolk Southern Corp. 2.46% 2.49% 16.28% 2.26%
Union Pacific Corp. 2.28% 2.48% 18.50% 0.45%
United Parcel Service Inc. 9.38% -2.44% 56.12% -1.35%
Balance-Sheet-Based Accruals Ratio, Sector
Industrial Transportation 0.00% 2.58% 4.84% 21.34% 6.49%
Balance-Sheet-Based Accruals Ratio, Industry
Industrials 0.00% -7.59% 2.14% 12.22% -15.61%

Based on: 10-K (filing date: 2020-07-20), 10-K (filing date: 2019-07-16), 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).

1 2020 Calculation
Net operating assets = Operating assets – Operating liabilities
= 68,65633,239 = 35,417

2 2020 Calculation
Balance-sheet-based aggregate accruals = Net operating assets2020 – Net operating assets2019
= 35,41733,019 = 2,398

3 2020 Calculation
Balance-sheet-based accruals ratio = 100 × Balance-sheet-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,398 ÷ [(35,417 + 33,019) ÷ 2] = 7.01%

4 Click competitor name to see calculations.

Financial ratio Description The company
Balance-sheet-based accruals ratio Ratio is found by dividing balance-sheet-based aggregate accruals by average net operating assets. Using the balance-sheet-based accruals ratio, FedEx Corp. deteriorated earnings quality from 2019 to 2020.

Cash-Flow-Statement-Based Accruals Ratio

FedEx Corp., cash flow statement computation of aggregate accruals

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Net income 1,286  540  4,572  2,997  1,820  1,050 
Less: Cash provided by operating activities 5,097  5,613  4,674  4,930  5,708  5,366 
Less: Cash used in investing activities (5,846) (5,473) (5,677) (4,981) (9,446) (5,752)
Cash-flow-statement-based aggregate accruals 2,035  400  5,575  3,048  5,558  1,436 
Financial Ratio
Cash-flow-statement-based accruals ratio1 5.95% 1.22% 18.65% 11.92% 26.08%
Benchmarks
Cash-Flow-Statement-Based Accruals Ratio, Competitors2
CSX Corp. 2.23% 1.35% 14.53% 2.20%
Norfolk Southern Corp. 2.24% 2.32% 15.40% 2.18%
Union Pacific Corp. 1.77% 1.68% 17.71% 0.30%
United Parcel Service Inc. 8.56% -7.57% 50.66% -3.96%
Cash-Flow-Statement-Based Accruals Ratio, Sector
Industrial Transportation 0.00% 2.80% 3.91% 19.82% 5.57%
Cash-Flow-Statement-Based Accruals Ratio, Industry
Industrials 0.00% -2.80% -2.20% 0.01% -9.77%

Based on: 10-K (filing date: 2020-07-20), 10-K (filing date: 2019-07-16), 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).

1 2020 Calculation
Cash-flow-statement-based accruals ratio = 100 × Cash-flow-statement-based aggregate accruals ÷ Avg. net operating assets
= 100 × 2,035 ÷ [(35,417 + 33,019) ÷ 2] = 5.95%

2 Click competitor name to see calculations.

Financial ratio Description The company
Cash-flow-statement-based accruals ratio Ratio is found by dividing cash-flow-statement-based aggregate accruals by average net operating assets. Using the cash-flow-statement-based accruals ratio, FedEx Corp. deteriorated earnings quality from 2019 to 2020.