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Fedex: Financial Reform And Investor Protection Act Of 2002

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Discussion Although FedEx has a reputation as an innovative company, has a strong position in its market, has a strong stock price, and reports strong revenues; there were still many concerning issues revealed by the financial ratios and financial statements analyses in the previous sections. These specific areas of concern are management’s inability to effectively utilize debt and assets as evidenced by the low ROE and ROA figures, the low net-margins compared to UPS that also demonstrate a concerning lack of efficiency, and the troubling debt situation that indicates a risky leverage situation as illustrated by the D/E ratio. None of these issues alone are extremely problematic, but taken together, they are extremely concerning and they …show more content…

Enron was a stark example of why financial accounting, accounting standards, reliable financial reporting, and oversight is so important to investors and creditors. Congress responded to public outcry by passing a bill, which President George W. Bush signed, into law in 2002. The Public Company Accounting Reform and Investor Protection Act of 2002, also known as the Sarbanes-Oxley Act or SOX, applies to all publicly traded companies. Sarbanes-Oxley, among other things, seeks to regulate auditors and the functions they perform. To help accomplish this task, the SOX Act required the establishment of an oversight board. This five-member oversight board has authority to set standards regarding auditing and the auditing process. Another key aspect of the SOX Act was instituting corporate accountability. Company executives must now personally attest to the accuracy of the financial statements and disclosures. The Sarbanes-Oxley Act had many costly consequences for the business world, but, if the public has no confidence in the market, investment is stifled and the entire economy slows

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