FedEx Corp. (NYSE:FDX)

The analysis of the financial ratios over the reported periods reveals several noteworthy trends in the operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio shows a consistent upward trend from 121.01 to a peak around 150.76, followed by slight fluctuations, generally remaining above 140 in recent periods. This suggests an improvement in the efficiency of inventory management, with inventory being sold and replaced more frequently over time.

Receivables Turnover

The receivables turnover ratio exhibits a gradual increase from 6.85 to peaks near 8.85, indicating enhanced effectiveness in collecting receivables. The fluctuations noted towards the end imply some variability in collection efficiency but overall maintain a higher turnover compared to initial periods.

Payables Turnover

The payables turnover ratio shows some volatility but generally remains stable within the low- to mid-20s range, peaking temporarily at 27.5 before settling around 23–24. This pattern suggests relatively consistent payment terms with suppliers, with some temporary acceleration in payment possibly reflecting strategic vendor relations or cash management practices.

Working Capital Turnover

This ratio has increased significantly over the periods, from 11.46 to highs exceeding 26, indicating improved efficiency in utilizing working capital to generate sales. The sharp improvement in recent quarters underscores tighter working capital control and enhanced operational efficiency.

Average Inventory Processing Period

The number of days inventory remains on hand is consistently low, mostly around 2 to 3 days, demonstrating rapid inventory turnover and efficient stock handling with minor variations.

Average Receivable Collection Period

There is a noticeable reduction in the collection period from approximately 56 days to the low 40s, revealing faster collection of receivables over time. This reduction supports the observed increase in receivables turnover.

Operating Cycle

The operating cycle duration has decreased from nearly 59 days to mid-40s, indicating a shortened time for turning raw materials into cash, which is beneficial for liquidity and operational efficiency.

Average Payables Payment Period

The number of days taken to pay suppliers remains fairly steady around 15–18 days, with a brief dip to 13 days, maintaining a balanced approach between preserving cash and meeting payables in a timely manner.

Cash Conversion Cycle

The cash conversion cycle has shortened from about 41 days to a range near 28 to 34 days, confirming improvements in managing the time lag between outflows and inflows of cash. This indicates enhanced working capital management, reducing the capital tied up in the operating cycle.

Revenue Trends

Revenue shows an overall upward trajectory from August 2019 through May 2022, increasing from approximately $17,048 million to about $24,394 million. This growth period is marked by consistent quarterly increases, especially notable from August 2020 to May 2022. However, from August 2022 onward, revenue experiences a slight decline and exhibits more volatility. It dips from $23,242 million in August 2022 to around $21,681 million by August 2023, then fluctuates modestly through subsequent quarters, ending near $22,220 million in May 2025. This indicates some stabilization with minor fluctuations in the more recent periods compared to the steady growth earlier.

Spare Parts, Supplies, and Fuel Expenses

The costs associated with spare parts, supplies, and fuel show relative stability across the periods, generally ranging from $570 million to $660 million. Initial quarters maintain values close to $570 million, followed by a gradual increase peaking around $655 million in November 2022. Thereafter, these expenses slightly decrease and fluctuate between $600 million and $640 million through the last reported quarters. The steadiness in these costs, despite revenue fluctuations, suggests controlled operational expenses in these categories.

Inventory Turnover Ratio

Inventory turnover is available starting May 2020, indicating high values exceeding 120 times per period initially and demonstrating an increasing trend to approximately 150 by August 2021. This upward trend peaks at around 150.76 and remains relatively high but gradually declines to about 136.74 by August 2023. Following this decline, the ratio experiences minor fluctuations, stabilizing between 140 and 146 up to May 2025. High turnover ratios suggest efficient inventory management; however, the slight decrease post-peak might indicate moderate inventory accumulation or slower turnover in recent periods.

Overall Insights

The data collectively reflects a period of strong revenue growth followed by a phase of mild decrease and stabilization. Operating costs for spare parts, supplies, and fuel remain relatively stable, highlighting effective cost management. Inventory turnover ratios are notably high, implying effective use of inventory resources during the majority of the periods assessed, though a minor decline in the last two years could warrant monitoring to prevent potential build-up. These patterns underscore a resilient operational performance with areas for attention in recent quarters related to revenue fluctuations and inventory efficiency.

Revenue Trends

The revenue shows a general upward trend from August 2019 through May 2022, increasing from 17,048 million US dollars to a peak of 24,394 million US dollars. Post-May 2022, revenue experiences fluctuations, with declines observed in the subsequent quarters reaching around 21,681 million US dollars by August 2023. There is a slight recovery afterward, maintaining levels near 22,000 million US dollars through to May 2025. This pattern suggests a strong growth phase followed by stabilization and mild volatility in revenue generation.

Receivables, Less Allowances

Receivables exhibit an increasing trend from August 2019 at 9,312 million US dollars to a peak near 12,069 million US dollars in August 2021. After this point, a decrease occurs, followed by fluctuations around the 10,000 to 11,000 million US dollars range up to May 2025. This indicates some variability in outstanding receivables, including periods of both accumulation and collection improvement.

Receivables Turnover Ratio

This ratio begins being reported from May 2020, initially at 6.85 times, and generally trends upwards, reaching above 8 times in several quarters, peaking at 8.85 in May 2023. Following this peak, the turnover ratio fluctuates but remains above 7.7 times through May 2025. An increasing receivables turnover suggests improving efficiency in collecting outstanding amounts, although some volatility in collection speed is evident in the later periods.

Overall Insights

The company experienced strong revenue growth up to mid-2022, followed by a period of stabilization and moderate fluctuations. Receivables levels show variability but generally align with revenue trends, reflecting adjustments in credit policies or collection practices. The receivables turnover ratio improvement indicates more efficient receivables management, potentially enhancing cash flow despite the fluctuating revenue and receivables balances. The combined trends suggest a phase of expansion, followed by operational adjustments to sustain profitability and liquidity.

The revenue of the company generally exhibits a growth trend from August 2019 through May 2022, increasing from approximately 17,048 million US dollars to a peak near 24,394 million US dollars. During this period, the revenue experienced some fluctuations but maintained an overall upward trajectory. After May 2022, a slight decline is observable, with revenue decreasing gradually and fluctuating between approximately 21,681 million and 23,242 million US dollars through to May 2025. This indicates a period of stabilization or minor contraction following the previously strong growth phase.

Accounts payable values show a moderate increase from August 2019 to November 2021, rising from about 3,179 million to over 4,190 million US dollars. Subsequent to November 2021, there is a trend of minor fluctuations and a slight downward movement until August 2024, reaching levels around 3,189 million US dollars. Towards the end of the data span, accounts payable figures show renewed volatility but remain generally below the peak levels seen in late 2021.

The payables turnover ratio data is available from May 2020 onward and highlights some variability but generally remains within a relatively narrow range, averaging around 22 to 24 times turnover. The ratio peaked notably at 27.5 during November 2024, indicating an accelerated rate of paying off accounts payable relative to purchases at that point. This suggests periods where the company potentially optimized payment processes or negotiated favorable terms with suppliers to improve cash flow management.

Overall, the data points to a phase of growing revenue and increasing accounts payable leading up to late 2021, followed by a period of stabilization and slight contraction in revenue, alongside fluctuating but stable payables turnover ratios. The company's ability to maintain payables turnover near historical averages despite revenue fluctuations suggests consistent management of supplier payments across the observed quarters.

Revenue Trend

Steady growth up to mid-2022, followed by minor declines and stabilization up to mid-2025.

Accounts Payable

Increase up to late 2021, partial decline thereafter, remaining below peak levels by mid-2025.

Payables Turnover Ratio

Relatively stable around 22-24, with a notable spike at 27.5 in late 2024, indicating improved payment efficiency.

Insights

Growth phase succeeded by stabilization; effective payables management maintained despite revenue fluctuations.

Working Capital

Working capital experienced considerable fluctuations over the observed periods. Initially, it declined from 3082 million USD in August 2019 to 2216 million USD by February 2020. Following this, there was a marked increase reaching a peak of 9150 million USD in November 2020. After this peak, working capital generally trended downward, with intermittent rises, falling to a low point of 2975 million USD in May 2025. The overall pattern indicates variability with a peak in late 2020 and a subsequent gradual decline toward 2025.

Revenue

Revenue displayed a steady upward trend from August 2019, starting at 17048 million USD and rising consistently to a high of 24394 million USD by May 2022. After this peak, revenue showed some decline and volatility, dropping to 21681 million USD by August 2023, before stabilizing around the 22000 million USD mark through May 2025. The general trend is positive growth peaking in mid-2022, followed by a slight reduction and stabilization.

Working Capital Turnover

Working capital turnover ratios were not reported until May 2020, from which point they exhibit a clear increasing trend. The ratio rose from 11.46 to 29.55 over the observed timeframe, indicating improved efficiency in using working capital to generate revenue. Notable increases are visible from mid-2021 onwards, reaching the highest turnover ratios in 2024 and 2025, suggesting enhanced asset utilization despite the decline in working capital values.

Summary

The data reflects an initial contraction in working capital early in the period, followed by a sharp rise and then a gradual decline. Revenue followed an upward trajectory through mid-2022 before stabilizing at a slightly lower level. The increasing working capital turnover throughout the latter periods suggests improving operational efficiency in using working capital to generate sales, even as the absolute working capital amounts decreased. This combination of trends may indicate a strategic focus on optimizing working capital management while sustaining revenue levels within a relatively narrow range after mid-2022.

The inventory turnover ratio exhibits a clear upward trend from May 31, 2020, through November 30, 2021, increasing from approximately 121 to around 150. This indicates an improvement in the efficiency of inventory management, reflecting faster turnover of inventory during this period. Subsequently, the ratio stabilizes with slight fluctuations around the 140 to 146 range from February 28, 2022, to May 31, 2025, indicating a consistent level of inventory turnover over time.

The average inventory processing period corresponds inversely with the turnover ratio and demonstrates relative stability throughout the observed quarters. It ranges predominantly between 2 and 3 days, signifying that the company maintains a short inventory holding period. Minor variations are evident, with the processing period predominantly at 3 days during the early stages and alternating between 2 and 3 days in later periods.

Inventory Turnover Ratio

The ratio increases significantly from approximately 121 in May 2020 to a peak near 150 by November 2021, reflecting enhanced efficiency in inventory utilization.

Post-November 2021, the ratio fluctuates mildly but remains generally stable, oscillating between 136 and 146 through May 2025.

Average Inventory Processing Period

The processing period holds steady between 2 and 3 days across all reported quarters.

There is a slight tendency for the processing period to shorten to 2 days during peak turnover periods, supporting the observed increase in inventory turnover.

In summary, the data indicates that the company experienced an improvement in inventory management efficiency from mid-2020 through late 2021, with inventory turning over more rapidly and the processing period correspondingly shortening. Following this enhancement, the company maintained relatively stable inventory management metrics, suggesting consistent operational performance related to inventory handling over the subsequent quarters.

The data reveals patterns in the receivables turnover ratio and the average receivable collection period over multiple quarters from mid-2020 through mid-2025. Both metrics provide insight into the efficiency of accounts receivable management.

Receivables Turnover Ratio:

The ratio begins at 6.85 in May 2020 and exhibits a generally upward trend with some fluctuations through the periods analyzed. It rises steadily to a peak of 8.85 by August 2023. Subsequent quarters show minor variation but maintain a relatively high level around 8.1 to 8.8, with a decrease to 7.73 in February 2025. This upward trend over most of the timeframe indicates increasing efficiency in collecting receivables.

Average Receivable Collection Period:

Consistent with the receivables turnover ratio, the average number of days to collect receivables trends downward, starting at 53 days in May 2020 and falling to a low near 41 days between August 2023 and May 2024. After this low point, the collection period slightly increases, reaching 47 days in February 2025. The decline in days over most of the reported quarters suggests improved collection processes and faster conversion of receivables to cash.

Correlation and Observations:

The inverse relationship between the turnover ratio and collection period is evident, linking higher turnover ratios with fewer days to collect. Notably, the improvement is gradual but consistent over several years, reflecting operational enhancements or policy changes that foster quicker collections. The slight reversal of these trends in early 2025 may warrant further monitoring to understand if this is a temporary fluctuation or the start of a new pattern.

The analysis of the financial data over multiple quarters reveals several notable trends in the operational efficiency metrics.

Average Inventory Processing Period

The average inventory processing period remains relatively stable over the observed periods, generally fluctuating between 2 and 3 days. There is a slight reduction at certain points, such as in August 2021 through November 2022, where the period consistently measures 2 days, indicating a minor improvement in inventory turnover efficiency. However, the period occasionally returns to 3 days, suggesting a marginal variation without significant long-term improvement or deterioration.

Average Receivable Collection Period

The average receivable collection period exhibits a gradual downward trend from 53-56 days in the earlier quarters (Aug 2020 to Feb 2021) to lower values around 41-45 days in the recent quarters (from May 2022 onwards). This decline indicates an improvement in the company’s ability to collect receivables more quickly, thus enhancing cash flow efficiency. Minor fluctuations occur, but the overall pattern points to better credit management practices.

Operating Cycle

The operating cycle, which combines inventory processing and receivables collection periods, shows a similar declining trend over the quarters. Initially, it ranges from 55 to 59 days during the early 2020 periods, progressively decreasing to a range mostly between 43 and 48 days in the later periods. This suggests improved operational efficiency in turning inventory into cash. The data reflects the positive impact of shorter receivables collection periods and steady inventory processing times on the overall operating cycle.

In summary, the data depicts a marginal but consistent improvement in the company's working capital management, primarily driven by faster receivables collection. Inventory processing days are stable with minor variability, supporting gradual enhancements in operational efficiency as evidenced by the decreasing operating cycle over time.

Payables turnover ratio

The payables turnover ratio data commences from May 31, 2020. Starting at 21.17, this ratio exhibits a generally stable pattern with minor fluctuations over the periods analyzed. It slightly declined to 19.74 in May 31, 2021, indicating slower payables turnover at that time. Following this, the ratio increased steadily, peaking at 27.5 on August 31, 2024, which suggests an acceleration in the frequency of settling payables during that quarter.

After the peak in August 2024, the ratio decreased again to values ranging mostly in the low twenties. Overall, the trend demonstrates moderate variability with periods of increased efficiency in payment relative to outstanding payables, especially notable towards mid-2024.

Average payables payment period (in days)

The average payables payment period has shown a gradual decline over the observed timeframe, beginning at 17 days in May 2020. This metric remained relatively consistent between 15 and 18 days throughout most periods, indicating a stable payment timeframe to suppliers.

There was a slight dip to 13 days around August 31, 2024, aligning inversely with the peak in the payables turnover ratio at the same time, reflecting a shortened payment period. Post this date, the payment period stabilized again around 15-16 days.

The consistency in the payment period suggests disciplined cash management practices, with a tendency towards modestly faster payment cycles particularly evident in mid-2024.

Summary of relationship and implications

The inverse relationship between the payables turnover ratio and the average payment period is evident and aligns with expectations; as the company pays suppliers faster, the turnover ratio increases. The periods of heightened payables turnover and shortened payment days indicate improved payment efficiency, possibly in response to strategic cash flow management or operational demands.

There are no extreme fluctuations in either metric that would point to liquidity stress or payment delays. The relatively stable values suggest that the company maintains consistent supplier payment practices over time.

The data indicates several key trends in the company's working capital management metrics over the analyzed periods.

Average Inventory Processing Period

The inventory processing period remained relatively stable, fluctuating between 2 and 3 days from May 2020 through May 2025. Notably, the period held steady at 3 days initially, decreased to 2 days in late 2021 and 2022, and then experienced slight variability around these values, indicating consistent inventory turnover without significant delays or acceleration.

Average Receivable Collection Period

This metric exhibited a generally decreasing trend over the observed time frame. It started around the mid-50 days range (53-56 days) in 2019 and early 2020, subsequently declining to low 40s by late 2022 and maintaining values in the low to mid-40s through mid-2025. Minor fluctuations occurred, but the overall pattern suggests improvement in the collection of receivables, which might reflect enhanced credit management or quicker customer payments.

Average Payables Payment Period

The payables payment period showed modest variation, mostly hovering between 15 and 18 days. It was relatively stable at around 17-18 days in early periods, then slightly decreased to as low as 13 days in late 2023, before settling back to approximately 15-16 days by mid-2025. This indicates a consistent pace in settling payables, with occasional shorter payment intervals.

Cash Conversion Cycle

The cash conversion cycle experienced a noticeable downward trend from 2019 through 2025, moving from approximately 39-41 days down to a range generally between 27 and 34 days. Starting with a higher cycle around 39-41 days, the period gradually decreased, reaching the upper 20s by early 2023, followed by minor oscillations in the subsequent periods. This trend suggests enhanced efficiency in managing the operating cycle, reflecting faster conversion of resources into cash.