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.