FedEx Corp. (NYSE:FDX)

The financial data exhibits several meaningful trends in turnover ratios and related operational periods over the examined timeframe. The inventory turnover ratio shows an overall increasing trend with some fluctuations, rising from 126.03 in 2019 to peaking at 149.26 in 2023 before a slight decline to 142.82 in 2024. This suggests enhanced efficiency in inventory management over the years, albeit with a minor recent slowdown.

Receivables turnover moved somewhat irregularly, dropping from 7.65 in 2019 to 6.85 in 2020, followed by a gradual increase to 8.85 in 2023 and a slight dip to 8.69 in 2024. This pattern implies variability in the company's effectiveness in collecting receivables but an overall improvement since 2020.

The payables turnover ratio generally trends upward, increasing from 23.00 to a notably higher 27.50 by 2024. This indicates the company is paying its suppliers more quickly in recent periods compared to earlier years.

Working capital turnover demonstrates a significant increase from 17.11 in 2019 to 18.07 in 2024, with a low point in 2020 at 11.46. This improvement signals better utilization of working capital to generate revenue.

Regarding operational periods measured in days, the average inventory processing period remains quite stable, fluctuating between 2 and 3 days, suggesting consistent inventory turnover speed.

The average receivable collection period initially lengthened from 48 days in 2019 to 53 days in 2020 but then decreased steadily to 41 days by 2023, with a slight uptick to 42 days in 2024. This reflects a general trend towards faster collection of receivables in recent years.

The operating cycle duration decreases from 51 days to 43 days between 2019 and 2023, slightly increasing to 45 days in 2024, indicating a reduction in the total time to convert inventory and receivables into cash over most of the period.

Average payables payment period remains relatively stable, oscillating between 16 and 17 days until 2023, followed by a decrease to 13 days in 2024, reinforcing the trend toward quicker payments to suppliers.

The cash conversion cycle shows a marked reduction from 35 days in 2019 to 27 days in 2023, suggesting improved cash flow management. However, it increases again to 32 days in 2024, indicating a moderate elongation in the net time to convert investments in inventory and receivables into cash.

Summary of Trends

Efficient inventory management is evident from the rising inventory turnover and stable low inventory processing periods.

Receivables management improved notably after 2020, as reflected by increased turnover ratios and shortened collection periods.

Faster payment to suppliers is indicated by increasing payables turnover and decreasing payables payment periods in recent years.

Overall improvements in working capital use and cash flow efficiency are shown by increases in working capital turnover and a generally decreasing cash conversion cycle until 2023.

A slight reversal in some indicators in 2024, such as reduced inventory turnover and increased cash conversion cycle, suggests potential challenges or changes in operational dynamics.

Revenue Trends

Revenue exhibited a decline from 69,693 million US dollars in 2019 to 69,217 million in 2020. Thereafter, a significant increase was observed peaking at 93,512 million in 2022. However, subsequent periods showed a gradual decrease, reaching 87,693 million by 2024. This pattern indicates a recovery after 2020 followed by a slight downward adjustment in recent years.

Spare Parts, Supplies, and Fuel

Expenditures for spare parts, supplies, and fuel increased consistently from 553 million in 2019 to 637 million in 2022. Following this peak, a moderate decline occurred in 2023, with spending at 604 million, before slightly rising again to 614 million in 2024. Overall, the cost component shows a generally upward trend with minor fluctuations in the later years.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates an overall increasing trend starting at 126.03 in 2019 and reaching a high of 149.26 in 2023. There is a slight decline to 142.82 in 2024. This indicates improvements in inventory management efficiency up to 2023, with a minor decrease in turnover efficiency in the last reported year.

Summary of Insights

Revenue growth stalled during 2020, likely influenced by external factors, but rebounded strongly until 2022 before easing off. Cost elements related to operational inputs steadily increased, reflecting possibly higher operational scale or costs. Inventory turnover trends suggest enhanced efficiency and asset utilization over the period, although recent data signals a marginal reversal that could warrant further monitoring.

Revenue Trend

The revenue showed a general upward trend from 2019 to 2022, increasing from 69,693 million US dollars in May 2019 to a peak of 93,512 million US dollars in May 2022. However, after reaching this peak, there was a decline over the subsequent two years, with revenue falling to 90,155 million in May 2023 and further to 87,693 million in May 2024. This indicates some challenges or market conditions affecting sales or service income in the more recent periods.

Receivables, Less Allowances Trend

The net receivables exhibited growth from 9,116 million US dollars in May 2019 to a high of 12,069 million in May 2021. Following this peak, the receivables declined slightly over the next three years, reaching 10,087 million in May 2024. This pattern suggests an increase in credit extended or billing activity until 2021, with a subsequent moderation or improved collections afterward.

Receivables Turnover Ratio

The receivables turnover ratio decreased from 7.65 in 2019 to 6.85 in 2020, indicating slower collections or longer credit periods during that year. This was followed by a slight recovery to 6.96 in 2021, then a significant improvement to 7.88 in 2022. The turnover ratio further increased to 8.85 in 2023 before a slight decrease to 8.69 in 2024. Overall, the trend reflects enhanced efficiency in collecting receivables after 2020, with the highest efficiency recorded in 2023, signaling improved cash flow management or credit policies.

Overall Insights

The data reflects a period of growth in revenue and receivables until around 2021-2022, followed by a downturn in revenue but continued focus on receivables collection efficiency. The rise in receivables turnover suggests tighter credit controls or faster collections, which could be a response to the decreasing revenue trend. The combined trends suggest an adaptive approach to managing working capital amid fluctuating sales levels.

The financial data over the indicated periods reveals several notable trends regarding revenue, accounts payable, and the payables turnover ratio.

Revenue

Revenue exhibits fluctuations throughout the periods. Starting from approximately 69.7 billion US dollars in 2019, revenue slightly decreases in 2020 to about 69.2 billion, possibly reflecting external economic factors during that year. Subsequently, there is a marked increase in 2021 and 2022, reaching about 83.96 billion and 93.51 billion respectively, which may indicate strong growth or recovery. However, in 2023 and 2024, revenue declines steadily to about 90.16 billion and 87.69 billion respectively, suggesting a reversal of the previous growth trend or potential challenges faced in the recent years.

Accounts Payable

The value of accounts payable shows an overall upward trend from 3.03 billion in 2019 to a peak of 4.03 billion in 2022. This increase may reflect greater operational scale or delays in payments. Following 2022, accounts payable decreases to approximately 3.85 billion in 2023 and further to 3.19 billion in 2024, indicating improved payment management or decreased obligations.

Payables Turnover Ratio

The payables turnover ratio exhibits some variability with a general increasing trend. The ratio declines from 23 in 2019 to 21.17 in 2020, then modestly rises to 21.86 in 2021. From 2021 onwards, the ratio increases more significantly to 23.2 in 2022, 23.43 in 2023, and sharply to 27.5 by 2024. This rising trend suggests enhanced efficiency in settling payables or possibly shorter payment terms with suppliers over time.

The financial data reveals several noteworthy trends over the six-year period ending May 31, 2024.

Working Capital

Working capital showed an increasing trend from 2019, rising from 4,073 million US dollars to a peak of 6,920 million US dollars in 2021. Following this peak, there was a decline in working capital, decreasing to 4,852 million US dollars by 2024. This pattern indicates an initial buildup of current assets over liabilities until 2021, after which the company reduced its net working capital.

Revenue

Revenue remained relatively stable from 2019 to 2020 at around 69,600 to 69,200 million US dollars. It then experienced significant growth in 2021 and 2022, reaching a high of 93,512 million US dollars in 2022. However, revenue decreased in the subsequent two years, falling to 87,693 million US dollars by 2024. Overall, revenue showed a growth phase followed by a slight contraction in the most recent years.

Working Capital Turnover

The working capital turnover ratio followed a generally upward trend beginning at 17.11 in 2019, dropping sharply to 11.46 in 2020. From 2020 onward, this metric consistently increased, reaching 18.07 in 2024, the highest point in the period analyzed. This suggests improved efficiency in using working capital to generate revenue, particularly after 2020 despite the decline in absolute working capital.

In summary, the data indicates that despite fluctuations in working capital and revenue, the company improved its operational efficiency in terms of working capital management. The decline in working capital after 2021 accompanied by sustained relatively high turnover ratios may suggest tighter control on short-term assets and liabilities while maintaining effective revenue generation.

Inventory Turnover

The inventory turnover ratio exhibits an overall increasing trend from 126.03 in May 2019 to a peak of 149.26 in May 2023, indicating an improvement in the efficiency of inventory management over this period. A notable rise occurred between May 2020 and May 2021, with the ratio increasing from 121.01 to 143.03, followed by a continued upward movement through May 2022 and May 2023. However, there is a slight decline in May 2024, where the ratio falls to 142.82, suggesting a minor reduction in turnover efficiency relative to the previous year.

Average Inventory Processing Period

The average inventory processing period remains relatively stable throughout the observed years, fluctuating between 2 and 3 days. Initially, it maintains 3 days from May 2019 through May 2021, then shortens to 2 days during May 2022 and May 2023, indicative of expedited inventory processing. In May 2024, this period returns to 3 days, suggesting a slight deceleration in processing speed. The changes in this metric generally align inversely with the inventory turnover ratio, highlighting a correlation between quicker processing and higher turnover rates.

Receivables Turnover

The receivables turnover ratio indicates the number of times the company collects its average receivables during a year. Over the observed period, this ratio has shown an overall increasing trend from 7.65 in 2019 to a peak of 8.85 in 2023, with a slight decrease to 8.69 in 2024. The initial decline in 2020 to 6.85 was followed by gradual recovery and improvement through subsequent years, suggesting enhanced efficiency in managing accounts receivable after 2020.

Average Receivable Collection Period

This metric represents the average number of days taken to collect receivables. The data shows a decreasing trend from 48 days in 2019 to a low of 41 days in 2023, slightly increasing to 42 days in 2024. The increase in 2020 to 53 days corresponds with the dip in receivables turnover during that year, indicating slower collections. The subsequent decline in collection period reflects improved collection efforts and faster receipt of payments from customers.

Overall Insights

The inverse relationship between the receivables turnover ratio and the average receivable collection period is clearly observed. The interruption in 2020, likely due to external factors, led to reduced turnover and prolonged collection periods. However, the company demonstrated recovery and ongoing improvement in managing receivables through 2024, achieving more efficient cash flow conversion and tighter credit management post-2020.

Average Inventory Processing Period

The average inventory processing period remained stable at 3 days from 2019 to 2021. It then decreased to 2 days in 2022 and 2023, indicating improved efficiency in inventory handling during these years. However, in 2024, the period increased back to 3 days, suggesting a slight reversal in this efficiency trend.

Average Receivable Collection Period

The average receivable collection period showed a peak at 53 days in 2020, following an initial value of 48 days in 2019. After 2020, this period gradually decreased, reaching its lowest value of 41 days in 2023, indicating improved collections and cash flow management. In 2024, there was a minor increase to 42 days, reflecting a slight extension in the collection period.

Operating Cycle

The operating cycle, which represents the total time to convert inventory and receivables into cash, mirrored the trends in the other two metrics. It increased from 51 days in 2019 to 56 days in 2020, then steadily declined to 43 days in 2023. A modest increase to 45 days occurred in 2024. These changes suggest that overall operational efficiency improved significantly after 2020, before experiencing a minor setback in the latest period.

The data reveals notable trends in the payables management of the company over the six-year period ending May 31, 2024. The payables turnover ratio exhibits a fluctuating pattern but with a general upward trajectory, especially pronounced in the most recent year.

Payables Turnover Ratio

Starting at 23 in 2019, the ratio decreased to its lowest point of approximately 21.17 in 2020, signaling a slower rate of payables clearance. Subsequently, it showed minor recovery over the next two years, rising to 21.86 in 2021 and 23.2 in 2022, nearly returning to the 2019 level. In 2023, the ratio maintained this level at 23.43 before a sharp increase to 27.5 in 2024, indicating significantly faster payment to suppliers in the latest period.

Average Payables Payment Period

This metric inversely parallels the turnover ratio, indicating the average time in days to settle payables. The payment period increased slightly from 16 days in 2019 to 17 days in 2020 and 2021, suggesting a slight delay in payments during these years. This duration then improved back to 16 days in 2022 and 2023 before dropping markedly to 13 days in 2024. This aligns with the sharp increase in turnover ratio, confirming a trend toward quicker payments in the most recent year.

Overall, the analysis reflects a strategic shift in payables management, particularly evident in 2024, where shorter payment cycles and higher turnover ratios suggest improved liquidity management or a change in supplier payment terms. Earlier years showed some volatility but remained relatively stable around the 16-17 day payment window and a payables turnover near 22-23. The recent acceleration in payables turnover and reduction in payment period may positively impact supplier relationships or indicate a prioritization of operational efficiency in managing payables.

Average Inventory Processing Period

The average inventory processing period remained stable at 3 days from 2019 to 2021, then decreased to 2 days in 2022 and 2023, indicating improved efficiency in inventory turnover. In 2024, it slightly increased back to 3 days, suggesting a minor slowdown or adjustment in inventory management.

Average Receivable Collection Period

The average receivable collection period increased from 48 days in 2019 to a peak of 53 days in 2020, possibly reflecting extended credit terms or collection challenges during that period. It then gradually decreased to 41 days by 2023, showing enhanced collections efficiency, before marginally rising to 42 days in 2024.

Average Payables Payment Period

The average payables payment period increased slightly from 16 days in 2019 to 17 days in 2020 and 2021, indicating a modest extension in payment terms. This period normalized back to 16 days in 2022 and 2023, followed by a notable decrease to 13 days in 2024, suggesting the company accelerated payments to suppliers or improved cash flow management.

Cash Conversion Cycle

The cash conversion cycle lengthened from 35 days in 2019 to 39 days in 2020, reflecting a temporary decrease in operational efficiency. It then progressively improved, reaching a low of 27 days in 2023, indicating better overall working capital management. However, in 2024, the cycle slightly increased to 32 days, denoting a minor decline in efficiency but still below earlier levels.