IDENTIFYING THE CAUSES OF PROFITABILITY CHANGES. The consolidated financial statements for Federal Express Corporation and Subsidiaries appear below:

REQUIRED:
1. Evaluate Federal Express’ performance in 1993. _ 2. What were the primary factors responsible for Federal Express’ loss in 1992 and return to profitability in 1993?
3. How did Federal Express finance the $329,878,000 increase in assets in 1993?

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Consolidated Statements of Operations Federal Express Corporation and Subsidiaries Years Ended May 31 In thousands, except per share amounts 1993 1992 1991 REVENUES $7,808,043 $7,550,060 $7,688,296 OPERATING EXPENSES: Salaries and employee benefits 3,807,493 3,637,080 3,438,391 Rentals and landing fees 658,138 672,341 650,001 Depreciation and amortization Fuel Maintenance and repairs Restructuring charges Other 579,896 577,157 562,207 495,384 508,386 663,327 404,639 404,311 449,394 (12,500) 254,000 121,000 1,497,820 1,473,818 1,551,850 7,430,870 7,527,093 7,436,170 OPERATING INCOME 377,173 22,967 252,126 OTHER INCOME (EXPENSES): Interest, net (160,923) (164,315) (181,880) Gain on disposition of aircraft and related equipment 4,633 2,832 11,375 Other, net (17,307) (8,312) (8,679) Payroll tax loss (32,000) (173,597) (169,795) (211,184)