Deciphering Financial Statements (FedEx)
The following summary data are from the May 31, 2004, balance sheet of FedEx. All numbers are in millions.
Total current assets |
$ 4,970 |
Property, plant, and equipment (net) |
9,037 |
Other long term assets |
5,127 |
Total assets |
$19,134 |
Current liabilities |
$ 4,732 |
Long term debt |
2,837 |
Other long term liabilities |
3,529 |
Total liabilities |
$11,098 |
Stockholders’ equity |
$ 8,036 |
Total sales |
$24,710 |
A summary of future minimum lease payments under capital leases and noncancelable operating leases (principally aircraft,
retail locations and facilities) with an initial or remaining term in excess of 1 year at May 31, 2004, is as follows (in millions):
|
Capital |
Operating |
|
Leases |
Leases |
2005 |
$160 |
$ 1,707 |
2006 |
122 |
1,555 |
2007 |
22 |
1,436 |
2008 |
99 |
1,329 |
2009 |
11 |
1,169 |
Thereafter |
225 |
7,820 |
|
$639 |
$15,016 |
Less amount representing interest |
$105 |
|
Present value of net minimum lease payments |
$534 |
|
Instructions: Compute the following ratio values.
1. Debt ratio (Total liabilities/Total assets).
2. Debt ratio assuming that FedEx’s operating leases are accounted for as capital leases.
3. Asset turnover (Sales/Total assets).
4. Asset turnover assuming that FedEx’s operating leases are accounted for as capital leases.