Question

How will COVID-19 impact your FedEx finances? Discuss cash flow, ROA, and debt ratio. Look at cash on hand. Do you foresee layoffs to your company? Why or why not? If there have already been layoffs you may discuss them, but also discuss the future.  

Answer 1

Due to Covid-19 the delivery is restricted but has also created a lot of residential demand due to the social distancing norms and lockdown situation is major parts of the world. Fed -Ex has raised, $1.5 billion to combat the negative impacts of the corona virus pandemic. So, the debt ratio of the company has increased but the cash flows have been more stable. The residential delivery has improved but the business to business dleivery has been majorly imapcted. The cash flows are stable but how long this might last is a matter of great concern as a lot of activities have been brought to a standstill. Due to the weakening economy we see the demand is declining in the future as well , so we do not see the situation improving anytime sooner. The ROA will alos fall due to the low levels of profitability due to the declining business activity.

I do not foresee layoffs but the salaries of the employees have been cut by 90%. Fed ex has taken a pledge that they will not involve in any significany layoffs. The decision not to reduce the staff wil negatively affect the cash in hand, the cash flows as well as the profitability. There seems no question of carrying out layoffs even in the future, keeping in mind the sensitivity of the issue in hand.