Current Ratio:

Trend Analysis: Regardless of the very slight decrease that has occurred throughout the years of 2019-2020-2021, we can say that FedEx didnt change much and has remained highly liquid even with the slight decrease of 0.157 from year 2019 till year 2021.

Comparative Analysis: When looking at the current ratios of both FedEx and UPS at the end of year 2021, we can see that there is a very slim different between their current ratios, however it is noticeable that FedEx is slightly more liquid than UPS wherein UPS has a ratio 1.419 which is less than FedEx (1.427) by 0.008 points.

Cash Ratio:

Trend Analysis: The cash ratio of FedEx slightly fluctuated throughout the years with a minor increase in 2020. It was 0.472 in 2019 increased to 0.519 in 2020 then decreased back to 0.483 in 2021. FedExs ability to pay off short-term obligations almost stayed the same and it might not be able to pay off its short-term obligations using cash balance only but by also selling assets.

Comparative Analysis: At the end of 2021, UPSs cash ratio (0.603) is higher than that of FedExs cash ratio (0.483) which is leaning more into the range of a good cash ratio (between 0.5-1.0). This shows that UPS is more likely to pay off its short-term obligations without having to sell any assets. Due to this comparison, it is now questionable whether or not UPS is more liquid than FedEx concerning short-term liabilities since FedEx cannot pay off its short-term liabilities using only its cash balance.

Inventory Turnover:

Trend Analysis: From year 2019 till year 2021, FedEx was able to increase its inventory turnover from 91.36 to 108.99. This increase leads us to understand that the companys inventory is not going to waste, and FedEx is managing its inventory effectively and using it to their advantage.

Comparative Analysis: In 2021, UPSs inventory turnover is 113.137 which is higher than that of FedExs in 2021(108.909), these are indications that UPS has an advantage over FedEx in managing their inventory and putting it to effective use. UPS ranks higher in inventory management.

Accounts Receivable Turnover:

Trend Analysis: Receivables turnover for FedEx have increased in years 2019 till 2021 from 6.49 to 7.349. We can deduce from this increase that there was an improvement in FedExs capacity and ability in earning its receivables.

Comparative Analysis: In 2021, UPSs receivables turnover is 7.574 slightly higher than FedExs 7.349 2021 receivables turnover. There is only a slight difference between their receivables turnover (a difference of 0.225). Both companies are almost equal in managing the collection of their account receivables.

Total Debt Ratio:

Trend Analysis: Total Debt Ratio for FedEx has slightly decreased throughout the years from 0.751 to 0.71 but remained steady. As mentioned in the common-sized financial analysis, shareholders equity is stable in the company after its increase in 2019 this allows for well-management of its debts as the companies retained earnings are increasing every year.

Comparative Analysis: Total Debt Ratio for UPS is 0.794 at the end of year 2021. Which means UPS uses 79.4% of its debts whereas FedEx uses 71%. In this case we can note that UPS is most likely relying on debt to finance its operations in comparison to FedEx. However, since there is a difference of only 8.4%, we can say that both companies almost share the same risks in regard to financing their operations.

knowing this information what can we recommend to FEDEX ?