FedEx Corp. (FDX)

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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

FedEx Corp., economic profit calculation

USD $ in millions

	12 months ended	May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

2018 Calculations

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden × hidden = hidden

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	FedEx Corp.'s economic profit increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

FedEx Corp., NOPAT calculation

USD $ in millions

	12 months ended	May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowances for doubtful accounts²
	Increase (decrease) in equity equivalents³
	Interest expense
	Interest expense, operating lease obligations⁴
	Adjusted interest expense
	Tax benefit of interest expense⁵
	Adjusted interest expense, after taxes⁶
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁷
	Investment income, after taxes⁸
	Net operating profit after taxes (NOPAT)

2018 Calculations

¹ Elimination of deferred tax expense. See Details »

² Addition of increase (decrease) in allowances for doubtful accounts.

³ Addition of increase (decrease) in equity equivalents to net income.

⁴ Addition of interest expense on capitalized operating leases. See Details »

⁵ Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 29% = hidden

⁶ Addition of after taxes interest expense to net income.

⁷ Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 29% = hidden

⁸ Elimination of after taxes investment income.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	FedEx Corp.'s NOPAT increased from 2016 to 2017 and from 2017 to 2018.

FedEx Corp., cash operating taxes calculation

USD $ in millions

	12 months ended	May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
	Provision for income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense
	Less: Tax imposed on investment income
	Cash operating taxes

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	FedEx Corp.'s cash operating taxes declined from 2016 to 2017 and from 2017 to 2018.

FedEx Corp., invested capital calculation (financing approach)

USD $ in millions

		May 31, 2018	May 31, 2017	May 31, 2016	May 31, 2015	May 31, 2014	May 31, 2013
	Current portion of long-term debt
	Long-term debt, less current portion
	PV of operating lease payments¹
	Total reported debt & leases
	Common stockholders' investment
	Net deferred tax (assets) liabilities²
	Allowances for doubtful accounts³
	Equity equivalents⁴
	Accumulated other comprehensive (income) loss, net of tax⁵
	Adjusted common stockholders' investment
	Invested capital

¹ Addition of capitalized operating leases. See Details »

² Elimination of deferred taxes from assets and liabilities. See Details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of equity equivalents to common stockholders' investment.

⁵ Removal of accumulated other comprehensive income.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	FedEx Corp.'s invested capital increased from 2016 to 2017 and from 2017 to 2018.

FedEx Corp., cost of capital calculations


Equity²	÷	=	×		=
Long-term debt³	÷	=	×	× (1 – 29%)	=
PV of operating lease payments⁴	÷	=	×	× (1 – 29%)	=
Total:

¹ USD $ in millions

³ Long-term debt. See Details »