FIN3334 FedEx Company Historical Financial Statements

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Question Description

you should base on the case study guide, complete the our data analysis,and
Calculate the NOA and NOPAT and the complete the form like example.

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Case Study Grading Points Items to be included in spreadsheet: (1 ) Include 5 years of historical balance sheets and income statements 2 (1a) All spreadsheet data should be easily read and easily navigated. It should all be on one spreadsheet, so the reader need not travel back and forth between numerous sources. 6 (1b) On spreadsheets, all cells should contain their formulas, so the reader can see what items are included in a total. 6 (1c) All spreadsheet totals should add up. 4 (1d) Retained earning should reconcile from one year to the next. In other words: beginning retained earnings plus net income minus dividends should equal ending retained earnings. 4 (2) Project 5 years of future balance sheets and income statements 2 (2a) In your balance sheets, separate out operating cash from excess cash and cash equivalents. 4 (2b) In your projected balance sheets, assume no change in excess cash or non operating assets. na (2c) Consider this report a first pass; and assume that there is no change in long term debt obligations, notes payable, common stock ir treasury stock. That will make your free cash flow computation easier. na (2d) If you are projecting a change in deferred tax assets or deferred tax liabilities, explain why you are projecting that change. (Remember that, in the long run, deferred tax assets and deferred tax liabilities zero out, since they are all based upon timing differences which will reverse.) na (2e) If you are projecting a change in non-operating assets explain why. 2 (2f) To make your projected liabilities and equity equal to your projected assets, include a line item between your liability section and equity section called Flexible Financing. Generally, this will represent cumulative additional funds needed AFN. And if it is negative, it will generally indicate cumulative free cash flow. Use the Flexible financing account as a balancing account. 5 (2g) Assume no change in Other Accumulated Comprehensive Income. This account appears in the equity section of the balance sheet and represents the unrealized gain or loss on marketable securities and foreign exchange. It is only a temporary account and should zero out over time. na (3a) Compute free cash flow for all years. 25 (3b) Show the disposition of free cash flow in all years, both historical and projected. 15 First Submission 75 Note: The first phase counts for 75 percent of your case study grade. If you fail to score at least 30 out of 40 points on parts 3(a) and 3(b), you will not be eligible to continue with the case study assignment and your cumulative grade will be limited to points earned to that point. Additional items to be included in final report. Respond to each of these questions in the final report, repeating the question number and question before responding. (4a) In the historical period, were there any acquisitions? And if so, were they stock for stock, assets for stock, etc.? 1 (4b) Did another firm acquire shares in your company in the historical period? And if so, were they stock for stock, or assets for stock, etc.? 1 (4c) If the firm is growing, is its growth real, or is it merely growth through acquisition? 2 (5a) Justify your revenue projections and your gross margin assumptions. na (5b) Explain which costs are fixed and which costs are variable and which costs have a fixed and variable component. If some of your costs are fixed, then there will be economies of scale, and your profit margins should improve. na (5c) If the provision for income tax differs significantly from 40 percent, explain why the difference. na (6) Analyze the firm in terms of Porters Five Forces: In other words outline to what extent the firm’s growth and profitability might be limited by (i) the power of its consumers, (ii) competition from rival producers, (iii) potential competition from new entrants into its market, (iv) the power of its input suppliers, or (v) the existence of substitute goods. na (7) If your firm is in the technology sector, explain the firm’s position in its industry. Is it a market leader? And if so, is it a market leader based upon its technological advantage? And what must the firm do to remain a leader in its industry? 2 (8) Are there any legal problems, or outstanding lawsuits pending, or lawsuits which have recently been settled? Explain. And explain what impact that might have on future results. na (9) Do a ratio analysis to compare your firm with 3 firms in its industry, but only report key ratios, which may include PE ratio, ROE, ROA, net profit margin, gross profit margin. A comparative Du Pont analysis might be helpful. But do not report other ratios, unless there is a significant difference. If your company is trading at a significantly higher PE ration than other firms in its industry, is there an opportunity to make acquisitions on a stock for stock basis? Identify potential acquisition targets. na (9a) Ratio comparisons should be presented in tables which are self explanatory. na (9b) Ratio comparisons should not be presented in narrative form. na (10) If the firm is facing possible insolvency, explain. If there is a possibility of insolvency, you may wish to compute break even point. 2 (11) If your Flexible Financing account has a large positive balance, indicating AFN, outline your plan for how the company will arrange outside financing. Will it borrow on a short term basis, issue long term debt, or sell additional shares? And do you estimate any problem with arranging that necessary financing? na (12) If your Flexible Financing account has a large negative balance, indicating FCF, how will you use that FCF? Will you begin to pay dividends? Buy back stock? Use the FCF for acquisitions? na (13) Place a value on the stock of your firm and support your computation. 5 (13a) Any computations, such as valuation, should be done in the form of tables which are easy to read. Use the same format as the valuation tables in PowerPoint lecture slides. Tables should be self-explanatory. In other words, the reader should not be forced to search the document for missing information. Tables should clearly state your assumptions. 3 (13b) A separate table should be presented to compute Horizon value. 2 (13c) And a second table should be presented incorporating the FCF of years 15, along with the Horizon value, to arrive at valuation. 3 (13d) Your valuation should approximate the current market value of the stock. If it does not approximate the current market value of the stock, then you need to rework your projected cash flows and Horizon values, in order to come up with a reasonable valuation. 4 (14) If you quote any analyst or news source, show your sources. Do not plagiarize, as plagiarism is a serious breach of the academic honor code. 2 Total points possible 102 Comments Liabilities and equity should include FFA and should agrre with total assets. Ten days of sales is reasonable, in the absence of any other estimate. Many students increased their excess cash holdings. By projecting all expenses as a fixed percentage of sales, you are assuming that all costs are variable and that there is no fixed component. Generally, students did a really good job on Porter's Five Forces. Only applied to Apple and Samsung. If the reader has to guess where the numbers came from, or if he has to navigate all over the spreadsheet to see where the numbers came from,it is not easy to read. Direct quotation need to be in quotation marks with footnotes. Historical and Projected Financia Ralph Lauren Corp. Period Income Statement Revenues: Total revenues Cost of goods sold Gross profit Operating Expenses: Selling, general and administrative Equity in earnings Non-recurring items Unreconciled Amt. Interest expense, net Pre-tax income Income taxes Net income Balance Sheet Assets Cash and equivalents Short-term investments Accounts receivable, net Inventories Other current assets Total current assets Fixed assets (net) Intangibles Goodwill Long-term investments Other fixed assets Total assets Accounts payable Accrued expenses Short-term debt Other current liabilities Total current liabilities Long-term debt Other liabilities 2012 2013 2014 2015 6,860 2,862 3,998 6,945 2,789 4,156 7,450 3,140 4,310 7,620 3,242 4,378 2,916 (9) 12 33 13 1,015 334 681 2,971 (10) 12 58 16 1,089 339 750 3,142 (9) 19 27 17 1,096 320 776 3,301 (11) 17 51 11 987 285 702 672 516 547 842 324 2,900 884 359 1,004 100 130 5,416 974 325 458 896 310 2,963 932 328 968 81 124 5,418 797 488 588 1,020 436 3,329 1,322 299 964 500 644 655 1,042 483 3,324 1,436 267 903 135 6,088 131 6,106 181 147 664 267 43 1,121 203 690 0 77 970 298 786 210 715 234 27 1,186 298 731 0 766 946 274 543 512 Total liabilities Additional Fund Needed - Cumulative (Surplus) Shareholders' equity Common Stock Paid-in capital Retained earnings Treasury stock Total Liabilities and Equity 1,764 1,633 2,054 2,215 0 0 0 0 3,653 198 1,624 4,042 (2,212) 3,785 95 1,752 4,647 (2,709) 4,034 115 1,979 5,257 (3,317) 3,891 (164) 2,117 5,787 (3,849) 6,088 6,106 5,416 5,418 The first step in computing FCF is to restate do a Pen That means to break the BS down into Net operating stakeholder claims. Note that assets are treated as a negative (since they and equity are treated as positive (since they represe Total assets Less non operating assets Marketable securities (short term Investment) Operating liabilities Accounts payable Accruals Short term debt Other Current liabilities Other non current liabilities Net operating assets Non operating assets Book value of the firm Additional Fund Needed - Cumulative (Surplus) Long term debt Common stock Paid In capital Retained earnings Accumulated other(treasury sock) (5,416) 516 (5,418) 325 (6,088) 488 (6,106) 644 181 0 0 766 543 (3,411) 147 664 267 43 512 (3,460) 203 690 0 77 786 (3,844) 210 715 234 27 731 (3,545) (516) (325) (488) (644) (3,927) (3,785) (4,332) (4,189) 0 0 0 0 274 198 1,624 4,042 (2,212) 0 95 1,752 4,647 (2,709) 298 115 1,979 5,257 (3,317) 298 (164) 2,117 5,787 (3,849) Stakeholder claims Total Changes 3,927 3,785 4,332 4,189 0 0 0 0 The next step is to compute changes by subtracting o (2) (670) (18) (191) 163 156 (34) 664 267 (723) (31) (49) 56 26 (267) 34 274 (384) 7 25 234 (50) (55) 299 Non operating assets 191 (163) (156) Book value of the firm 142 (547) 143 0 (274) (103) 128 605 (497) (142) 0 298 20 227 610 (608) 547 0 0 (279) 138 530 (532) (143) (0) 0 0 Total assets Less non operating assets Marketable securities (short term Investment) Operating liabilities Accounts payable Accruals Short term debt Other Current liabilities Other non current liabilities Net operating assets Additional Fund Needed Long term debt Common stock Paid In capital Retained earnings Accumulated other(treasury sock) Stakeholder claims Total Computation of FCF The final step is to use those change numbers to com Net Income Add back interest expense Less tax on Interest expense NOPAT (Additions to Net operating assets) FCF 750 16 (6) 760 (49) 711 776 17 (7) 786 (384) 402 702 11 (4) 709 299 1,008 Additional Fund Needed (Surplus) (Pay off for long term debt) 0 (274) 0 298 0 0 Additional common stock isssued/(Shares repurchased) Additional Paid in capital (Dividends paid) (Interest paid net off tax) (Increase) in non-operating assets Increase/(Decrease) in accumulated other Dispositions of FCF Total (103) 128 (145) (10) 191 20 227 (166) (10) (163) (279) 138 (172) (7) (156) (497) (711) (608) (402) (532) (1,008) 0 0 0 Positive means source of cash and negative represen ed Financial Statements uren Corp. 2016 2017 2018 2019 2020 2021 7,405 3,218 4,187 7,553 3,282 4,271 7,704 3,348 4,356 7,858 3,415 4,443 8,015 3,483 4,532 8,176 3,553 4,623 3,389 (11) 192 28 15 552 156 396 3,457 (11) 0 3,526 (11) 0 3,596 (11) 0 3,668 (11) 0 3,742 (11) 0 15 788 315 473 15 804 322 483 15 821 328 493 15 838 335 503 15 855 342 513 456 629 517 1,125 326 3,053 1,583 244 918 296 6,213 465 629 527 1,148 333 3,101 1,615 249 936 0 302 6,203 474 629 538 1,170 339 3,164 1,647 254 955 0 308 6,327 484 629 549 1,194 346 3,227 1,680 259 974 0 314 6,454 494 629 560 1,218 353 3,291 1,713 264 994 0 320 6,583 503 629 571 1,242 360 3,357 1,748 269 1,014 0 327 6,715 151 898 116 33 1,198 597 674 154 916 116 34 1,220 597 687 157 934 116 34 1,242 597 701 160 953 116 35 1,264 597 715 163 972 116 36 1,287 597 730 167 991 116 36 1,311 597 744 2,469 2,504 2,540 2,576 2,614 2,652 0 (350) (576) (810) (1,053) (1,305) 3,744 (180) 2,258 6,015 (4,349) 4,049 (180) 2,258 6,320 (4,349) 4,363 (180) 2,258 6,634 (4,349) 4,688 (180) 2,258 6,959 (4,349) 5,022 (180) 2,258 7,293 (4,349) 5,368 (180) 2,258 7,639 (4,349) 6,213 6,203 6,327 6,454 6,583 6,715 (6,583) (6,715) o restate do a Penman restatement of the Balance Sheet nto Net operating assets, non-operating assets, and gative (since they represent a use of cash), and liabilities since they represent a source of cash). (6,213) 629 (6,203) 629 (6,327) 629 (6,454) 629 629 629 151 898 116 33 674 (3,712) 154 916 116 34 687 (3,667) 157 934 116 34 701 (3,755) 160 953 116 35 715 (3,845) 163 972 116 36 730 (3,937) 167 991 116 36 744 (4,031) (629) (629) (629) (629) (629) (629) (4,341) (4,296) (4,384) (4,474) (4,566) (4,660) (350) 597 (180) 2,258 6,320 (4,349) (576) 597 (180) 2,258 6,634 (4,349) (810) 597 (180) 2,258 6,959 (4,349) (1,053) 597 (180) 2,258 7,293 (4,349) (1,305) 597 (180) 2,258 7,639 (4,349) 0 597 (180) 2,258 6,015 (4,349) 4,341 4,296 4,384 4,474 4,566 4,660 0 0 0 0 0 0 s by subtracting out the balances from the previous year. (107) 10 (124) (127) (129) (132) (15) 0 0 0 0 0 (59) 183 (118) 6 (57) (167) 3 18 0 1 13 45 3 18 0 1 14 (88) 3 19 0 1 14 (90) 3 19 0 1 14 (92) 3 19 0 1 15 (94) 15 0 0 0 0 0 (152) 45 (88) (90) (92) (94) 0 299 (16) 141 228 (500) 152 (350) 0 0 0 305 0 (45) (226) 0 0 0 315 0 88 (234) 0 0 0 325 0 90 (243) 0 0 0 335 0 92 (251) 0 0 0 345 0 94 0 0 (0) 0 0 0 e numbers to compute FCF and the Disposition of FCF. 396 15 (6) 405 (167) 238 473 15 (6) 482 45 527 483 15 (6) 492 (88) 403 493 15 (6) 502 (90) 411 503 15 (6) 512 (92) 420 513 15 (6) 522 (94) 428 0 299 (350) 0 (226) 0 (234) 0 (243) 0 (251) 0 (16) 141 (168) (9) 15 0 0 (168) (9) 0 0 0 (168) (9) 0 0 0 (168) (9) 0 0 0 (168) (9) 0 0 0 (168) (9) 0 (500) (238) 0 (527) 0 (403) 0 (411) 0 (420) 0 (428) 0 0 (0) 0 negative represents a disposition, or distribution of cash. 0 (0) https://finance.yahoo.com/quote/RL?ltr=1 (Data has been taken from this site) Calculation of WACC Beta Risk-free Rate Market risk premium Cost of Equity Weight of Equity 0.62 0.02 0.08 0.0696 0.8827 Cost of debt Weight of debt Tax Rate 0.06144 Hence, WACC 0.03 0.1173 (Weights were based on book values, and shou 0.4 (We have assumed 40% tax all over) 0.0021107 0.06355 Calculation of Horizon Value FCF 2021 Growth FCF 2022 WACC Growth HV 2021 428.39 0.02 (We have assumed 2% growth all over) 436.957 0.06355 0.02 10033.6 Calculation of Value of the Firm Year FCF PViF 2017 2018 2019 2020 2021 HV 527 403 411 420 428 10034 0.940 0.884 0.831 0.782 0.735 0.735 Total value of the firm Less Debt Value of Equity No. of Shares Value per Share Market value per share PVCF 495 M 357 342 328 315 7,373 9,210 (713) 8,497 48 176.40 111.92 M M M M book values, and should have been based on market values) Period Ending Operating Revenue Gross Profit Selling, General and Administrative Depreciation, Depletion and Amortization Restructuring and Impairment Charges Other Operating Expenses Total Operating Expenses Operating Income Interest Expense Interest and Investment Income Other Income (Expense) Total Other Income (Expense) Income Before Income Taxes Income Taxes 5/31/2014 5/31/2015 5/31/2016 45,567,000 47,453,000 50,365,000 45,567,000 47,453,000 50,365,000 16,171,000 17,110,000 18,581,000 2,587,000 2,611,000 2,631,000 276,000 22,994,000 25,589,000 26,076,000 41,752,000 45,586,000 47,288,000 3,815,000 1,867,000 3,077,000 -160,000 18,000 -15,000 -235,000 14,000 -19,000 -336,000 21,000 -22,000 -157,000 -240,000 -337,000 3,658,000 1,627,000 2,740,000 1,334,000 577,000 920,000 Consolidated Net Income (Loss) 2,324,000 1,050,000 1,820,000 Net Income (Loss) Attributable to Common Shareholders, Basic 2,324,000 1,050,000 1,820,000 Net Income (Loss) Attributable to Common Shareholders, Diluted2,324,000 1,050,000 1,820,000 Basic Earnings Per Share, As Reported Diluted Earnings Per Share, As Reported Basic Shares Outstanding Diluted Shares Outstanding NOPAT 7.56 7.5 307,000 310,000 3.7 3.65 283,000 287,000 6.59 6.51 276,000 279,000 2,324,000 1,050,000 1,820,000 5/31/2017 5/31/2018 60,319,000 65,450,000 60,319,000 65,450,000 21,542,000 23,207,000 2,995,000 3,095,000 380,000 30,745,000 33,898,000 55,282,000 60,580,000 5,037,000 4,870,000 -512,000 33,000 21,000 -558,000 48,000 -7,000 -458,000 -517,000 4,579,000 4,353,000 1,582,000 -219,000 2,997,000 4,572,000 2,997,000 4,572,000 2,997,000 4,572,000 11.27 11.1 266,000 270,000 17.12 16.81 267,000 272,000 2,997,000 4,572,000 Period Ending 5/31/2014 5/31/2015 5/31/2016 5/31/2017 2,908,000 5,460,000 463,000 522,000 330,000 3,763,000 5,719,000 498,000 3,534,000 7,252,000 496,000 3,969,000 7,599,000 514,000 355,000 707,000 546,000 9,683,000 10,335,000 11,989,000 12,628,000 Property, Plant and Equipment Accumulated Depreciation 40,691,000 -21,141,000 42,864,000 -21,989,000 41,869,000 -22,734,000 45,230,000 -24,645,000 Property, Plant and Equipment, Net 19,550,000 20,875,000 19,135,000 20,585,000 2,790,000 3,810,000 1,047,000 1,511,000 6,747,000 5,149,000 2,939,000 7,154,000 5,396,000 2,789,000 33,070,000 36,531,000 45,959,000 48,552,000 1,971,000 1,277,000 1,000 2,063,000 2,066,000 1,436,000 19,000 2,435,000 2,944,000 1,972,000 29,000 3,063,000 2,752,000 1,914,000 22,000 3,230,000 5,312,000 5,956,000 8,008,000 7,918,000 4,736,000 3,484,000 2,114,000 2,147,000 7,249,000 4,893,000 1,210,000 2,230,000 13,733,000 6,227,000 1,567,000 2,640,000 14,909,000 4,487,000 2,485,000 2,680,000 17,793,000 21,538,000 32,175,000 32,479,000 32,000 2,643,000 -4,133,000 506,000 16,229,000 32,000 2,786,000 -4,897,000 172,000 16,900,000 32,000 2,892,000 -7,342,000 -169,000 18,371,000 32,000 3,005,000 -7,382,000 -415,000 20,833,000 15,277,000 15,277,000 33,070,000 14,993,000 14,993,000 36,531,000 13,784,000 13,784,000 45,959,000 16,073,000 16,073,000 48,552,000 164,000 212,000 0.1 800,000 318,000 185,000 207,000 0.1 800,000 318,000 178,000 218,000 0.1 800,000 318,000 252,000 237,000 0.1 800,000 318,000 29,036,000 32,030,000 39,952,000 42,570,000 Cash and Equivalents Trade Receivables Inventories Deferred Tax Assets, Current Prepaid Expenses and Other Current Assets Total Current Assets Goodwill Intangible Assets, Net Other Assets Total Assets Accounts Payable Employee Related Liabilities, Current Debt, Current Accrued and Other Current Liabilities Total Current Liabilities Long-Term Debt and Capital Lease Obligations Pension and Other Post-Retirement Liabilities Deferred Taxes, Noncurrent Other Noncurrent Liabilities Total Liabilities Common Stock Additional Paid In Capital Treasury Stock Accumulated Other Comprehensive Income Retained Earnings (Deficit) Total Equity Attributable to Parent Total Equity Total Liabilities and Equity Receivables Reserve Inventories Reserve Common Stock, Class A, Par Value Common Stock, Class A, Shares Authorized Common Stock, Class A, Shares Issued NOA(OA-OL) 5/31/2018 3,265,000 8,481,000 525,000 1,070,000 13,341,000 55,121,000 -26,967,000 28,154,000 6,973,000 3,862,000 52,330,000 2,977,000 2,177,000 1,342,000 3 ...
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Joantutor
School: Duke University

Attached.

FedEx Company Historical Finacial Statements
For the Year Ended 31st
Income Statement
Period
Reveneues
Operating expenses
Salaries and employee benefits
Purchased transportation
Rentals and landing fees
Depreciation and amortization
Fuel
Maintenance and repairs
Business realignment, impairment and other charges
Retirement plans mark-to-market adjustment
Others
Net Operating Income
Other Income (Expenses):
Interest expense
Interest income
Other, net
Profit before taxes
Provision for income tax (Benefits)
Net Income

2014
$ 45,567 $
16,171
8,011
2,622
2,587
4,557
1,862
15
5...

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