The following summary data are from the May 31, 2007, balance sheet of FedEx. All numbers are

Question:

The following summary data are from the May 31, 2007, balance sheet of FedEx. All numbers are in millions.

Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,629

Property, plant, and equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,636

Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,735

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,000

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,428

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,007

Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,909

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,344

Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,656

Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,214

A summary of future minimum lease payments under capital leases at May 31, 2007, is as follows (in millions):

Capital Leases

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $103

2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

$366

Less amount representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Present value of net minimum lease payments . . . . . . . . . . . . . . . . . . $308

A summary of future minimum lease payments under non-cancelable operating leases with an initial or remaining term in excess of one year at May 31, 2007, is as follows (in millions):

The following summary data are from the May 31, 2007,

Instructions:
Compute the following ratio values.
1. Debt ratio (total liabilities/total assets).
2. Debt ratio assuming that FedEx's operating leases are accounted for as capital leases.
3. Asset turnover (sales/total assets).
4. Asset turnover assuming that FedEx's operating leases are accounted for as capitalleases.

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...