Investment Decision Project by Brian Moulton, Clinton Griffin, Ryan Cowan, Chassidy Gonzales ACC 322: Intermediate Financial Accounting II Professor Mohammed Mohi Uddin, PhD, MBA University of Illinois Springfield, Illinois May 4, 2018 Abstract In conducting a financial analysis of the two companies you asked us to compare for investment opportunities United Parcel Services, “UPS” (UPS) and Federal Express, “FedEx” (FDX), we here at Sunny Futures Investments researched both companies' history and annual financial reports for three consecutive years (see appendix 1). We then compared the two corporations for your investment opportunity. The two continue to show year over year return on investment growth and have continued to grow their business …show more content…
Through hard work and dedication in the early 1900’s the company began to expand and went through a merger with another parcel delivery service. From there added an investor which expanded their transportation fleet and began to broaden their business to all major cities down the west coast. Through major turmoil and push back from the US Commerce Department the company was finally able to achieve delivery service to every address in the continental united states by 1975. The corporation then began to expand internationally from North America to Europe. By 1985 the company could deliver packages Next Day and by 1988 they owned and operated their own airline to lower expenses and shipping costs to their customers. Over the next few decades the company continued to evolve with expanding technology and consumer demands on globalization in the marketplace, spending billions on technological innovations to help meet customer demands in the most efficient way possible. They also started to acquire companies with supply chain management expertise to compete in the global market. After taking the company public in 1999 UPS has continued to grow through acquisitions of over 40 companies in all areas of the logistic, supply chain management, …show more content…
The Annual Reports for each company go into great detail regarding the accounting policies the corporations employ. A summary of these policies and their possible ramifications can be found below. FedEx FedEx features a Services Segment that allocates all overarching operating costs associated with overhead-related expenses such as marketing, billing, customer support, and many other operating expenses to its various other segments. This allocated cost is listed in the individual segment financial statements as “Intercompany Charges” and the allocation is made based on the operating income of the various transportation segments. FedEx also (as of 2015) immediately recognizes any actuarial gains or losses incurred from the company’s pension obligations. This is in line with the requirements defined in the International Financial Reporting Standards (GAAP does not require gains or losses to be immediately recognized). This leads to less uncertainty regarding the future impact of pension obligations on the reported value of FedEx’s