Financial ratio analysis paper due in 24 hours

United Parcel Service (UPS)

United Parcel Service (UPS) is one of the largest logistic companies in the world today. UPS has more than more than 2500 locations and has been a publically traded company for approximately 20 years. Based on their most recent annual report (2019), UPS has shown continued growth over the last 5 years and is projected to show record profits for 2020. According to the company’s 2019 Annual Report, consolidated revenue grew 3.1% to $74 billion and adjusted operating profit grew 10.4% to 8.2 billion. The company has committed to investing to increase efficiency and in 2019, launched several successful new solutions that had a positive impact on the overall operating performance.

Financial Highlights (2019)

The 2019 financial statements for UPS provided me with the company’s financial highlights, the key metrics and the free cash flow for the past 3 years. The financial highlights included the overall revenue, the operating expenses, the net income and the adjusted income. The total assets that the company had at the end of 2019 were $57,857,000 which was a $7,841,000 increase from the previous reporting year. The total amount of the retained earnings that the company had at the end of the year was $8,639,000. The cash flow from financing activities was $13,000,000. According to the annual report, the company invested $75,000,000 in the previous year (2019).

Financial Statements

The purpose of a business is to increase the wealth of the business owner but in order to make money, you have to be willing to spend money. The financial statements of a business show whether the business made a profit during a certain accounting period (monthly quarterly, annually) and which areas of the business contributed to generating the revenue. The money made represents the income of the business. The balance sheet will include all assets such as cash or land and liabilities such as bonds payable and stockholder’s equity. Once the liabilities are subtracted from the available assets it will reflect the balance. As a world –wide global company,

UPS has a wide array of assets (buildings, trucks, planes, etc.) that were purchased to expand the company. One of the most significant investments is the meta-heuristic optimization system, which it called 'On Road Integrated Optimization and Navigation' (ORION). Every day, ORION provides an optimized route for each of UPS' 55,000 U.S. drivers based on the packages to be picked up and delivered on that day. Costing more than $295 million to build and deploy, ORION is expected to save UPS $300-$400 million annually (Holland, Levis, Nuggehalli, Santilli & Winters, 2017). UPS purchase and implementation of the ORION system is a perfect example of how a company’s statement of cash flow explains how a company not only obtained the cash but also the amount of cash used and items purchased during the relevant accounting period.

The Bottom Line

The stakeholders who have invested in a business expect and/or require information about the business. It provides them with the means to make decisions regarding their investment; can they expect a profit and if they should leave their investment, contribute more or withdraw some or all. A business and/or organization can’t make an informed decision without having information about their financial health; businesses use a variety of financial statements (income, changes in equity, balance sheet , cash flows) to communicate with stakeholders and/or lenders but most importantly, the financial statement allows a business to identify their strengths, weaknesses, opportunities and possible threats to any competitive advantage they may have.

References

.

Holland, C., Levis, J., Nuggehalli, R., Santilli, B., & Winters, J. (2017). UPS Optimizes Delivery Routes. Interfaces, 47(1), 8-23. doi: 10.1287/inte.2016.0875