How have UPS and FedEx performed financially How do you meas

How have UPS and FedEx performed financially? How do you measure financial performance? What do the financial statements and ratios show? What does the stock-price performance tell you? How is EVA calculated? What does it reveal? Does stock price track the historical EVA?

Solution

Solution

         Financial performance measures that can be obtained from a firm’s financial statements consist of absolute data and financial ratios. Absolute measures such as income, net assets and equity, reveal trends and allow a company to be compared financial ratios. Absolute measures such as income, net assets and equity, reveal trends and allow a company to be compared to its performance over time, while financial ratios, including return-on-assets and current ratio, adjust for scale and allow for comparisons of different-sized companies.
Financial ratios are ideal to compare FedEx and UPS, since UPS has $13.5 billion more in assets and $11 billion more in revenues than FedEx . UPS is outperforming FedEx in liquidity, solvency and profitability measures, while lagging in activity and growth. This would indicate that UPS has superior financial performance, but the disadvantage of using financial statement information is the use of book values, not market values, which are historic. As a result, the information is not as relevant, and inferences are backward, not forward - looking.