Question one
According to the investing activities, FedEx is highly expanding its business. From the information that is provided in the statement of cash flows funds from the investing activities allows FedEx to expand its business. Although the firm get other finances, they are not enough to fund the different investment due to the substantial internal funding that is givento the operating activities. Furthermore, the dividends from the various shareholders of the firm are relatively small. Therefore, most of the funds accrued from the operating activities are reinvested in the company. Reinvesting in the company like the purchase of new aircraft allows the company to expand its business (Sander & Bobo, 2016). Additionally, the company gets funds from the acquisition of TNT Express NV which is earning it some profit after the purchase. From the annual report of FedEx, the cash flows are increasing on a yearly basis. The movement in the cash flows the company to know the impact of the balance sheet and income statement on cash (Sander & Bobo, 2016). In 2015, the cash and cash equivalents of the business were $3763.
Question two
The financing activities for the three consecutive years are as follows
The statement of financing activities shows that in 2015 the company borrowed more than it paid the retired debts as compared to the previous years. According to the statement of cash flows, small amount was received from the company’s sale of stock as compared to the year 2014 and 2013. Furthermore, the cash from the financing activities in 2015 increased as compared to the year 2015. [Reference to FedEx’s Statement of Changes in Common Stockholders’ Investment tells us that stock was sold or granted under employee benefit plans rather than being sold to the public.]
Question three
The following are the interest expense and income taxes for the year ended 31st may in 2015, 2014, and 2013 respectively.
Firms are usually required to disclose their incomes taxes and interest separately. Using the direct method in reporting the operating activities of a company helps in showing the amounts automatically. On the other hand, using direct method is statement of cash flows as evident by the statement of cash flows of the company, supplemental disclosure method is required.
Question four
According to FASB ACS 230–10–50–2 “If the indirect method is used, amounts of interest paid (net of amounts capitalized) and income taxes paid during the period shall be disclosed”, (2016). It means that in case the company uses the indirect method the amount of income taxes and interest that is paid during the fiscal year or period shall be divulged. This information applies to FedEx Company because it is using the indirect method when computing its cash flows statements as shown in the annual report, (2016).
Reference
Sander, P. J., & Bobo, S. (2016). The 100 best stocks to buy in 2016. Avon, Massachusetts : Adams Media.
(2016). Src.bna.com. Retrieved 25 June 2016, from http://src.bna.com/cjb
(2016). Retrieved 25 June 2016, from https://law.resource.org/pub/us/code/bean/fasb.html/fasb.230.2011.html
