Financial Analysis for Fedex Corporation

If they by a competitor, how will the merger be integrated in regards to culture, overlapping businesses, etc. Fed should increase growth internally. Fed should invest in growth in a number of ways: people/ training (customer service), capital (facilities and equipment upgrades), and advertising (product and services). Internal growth will inevitably cost money in the short-term, but the returns on these investments should outweigh the money spent over time. The business size will not necessarily increase because of internal growth, but the quality of the business will. As the US economy recovers in the coming years, consumers and small businesses will once again require more of the services that

Fed offers. Fed should make it be known that Fed Office is a retail storefront for which all of the company’s other services can be utilized. on capital or keep the leverage the same (or even decrease it). If so, why and by how much. Yes, Fed should increase their leverage to increase earning because in the real world, where companies must pay taxes, leveraging a firm does create value because a firm can deduct interest payments against its corporate income taxes. Increasing leverage therefore creates tax savings and increases the value of the firm. Fed managers should be cautioned that increasing leverage also increases risk.

A highly leveraged firm may be overcome with debt and runs the risk of going bankrupt if it cannot pay off its debt. Equity has a higher cost of capital, debt carries higher financial risk. As debt increases as a percentage of the company’s capital, leverage increases as well do as the chances of financial distress or default. Lowering financial leverage will absolutely lower the financial risk of the company; however, it may not lower the total risk. RECOMMENDATION #4: Should they increase marketing pending? If so, by how much and where should it be allocated. Should online marketing spending and international marketing increase by more than print ads? Justify any additional spending that is recommended.

Fed should increase its marketing spending by $200. 5 million, with $125 million to be spent on advertising. When people need something delivered quickly, safely, and on-time, they say they need to “Fed” it. Fed should work to maintain a controlling stake in the express delivery market while stealing share from UPS in domestic ground delivery by further fragmentation itself from UPS through actual innovation and service offerings and/or through manipulation in consumer perception. An issue with the shipping business is that buyers generally have little to no brand loyalty and incur negligible switching costs when changing from one provider to another.

Leave a Reply