United Parcel Service Research Paper

Pages: 13 (3877 words)  ·  Bibliography Sources: 13  ·  File: .docx  ·  Level: Master's  ·  Topic: Business

¶ … UPS

Section 1 Company's Services Analysis

Section-2 Financial Ratio Analysis

Section-3 Costing

Section-4 Future Projects Analysis

Section-5 Conclusion & Recommendations

Financial statements are the end products of an organization on which the investors, policy makers, creditors and other relevant people emphasize comprehensively. The main prospective of an organization is to increase the level of surplus by institutionalizing different revenue provisions. Organizations have to take numerous actions or decisions to keep the cycle of earning growing. Organizations usually make forecasted financial statements and take economic decisions based on these pro-forma statements (Anthony & Cornyn, 1982).

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Organizations take numerous operational and strategic decisions in to account to increase the level of its earning. Financial and business decisions are always difficult for the organizations to take because of its complicated and vary nature. There is far more difference between financial, investment and strategic analysis of an organization (Alexander, 2007). This particular assignment is also pertains to analysis but with different angles. This assignment has been divided into five different sections. The first section is all about the goods and services along with the market share of the chosen company, followed by the financial analysis of the company in the second section. Section 3rd and 4th define the costing and project evaluation stance of the company respectively. In the end the section 5 will conclude the reading. The choice of the company is important for this particular piece of work. The company which has been chosen for this assignment is United Parcel Services. The assignment is quite complicated in nature that is why comprehensive study has been required to accomplish this particular goal. The next entire section will cover the section no. 1 of this report which defines the company chosen, along with its products and services, market share, geographic and major competitors. Let's now start the first section of the report,

TOPIC: Research Paper on United Parcel Service Assignment

Section 1 Company's Services Analysis

The company which has been chosen for the analysis is Universal Parcel Services (UPS). In this section the products and services of the company has been jotted down along with the market share and major competitors of the company (Archand, 2003).

United Parcel Services Inc. (UPS) is a package delivery company with its headquartering located in Georgia, Unites States. According to the website of the company, UPS delivers more than 15 million packages in just one day to around 6 million customers worldwide. The company has its active operations in more than 200 countries worldwide. The best product of the company is the brown trucks which are called as package cars, very famous in the international market. .

The primary duty of the UPS is to deliver the package to the concerned person in just a matter of time. The work of the UPS and other parcel companies is just like the intermediaries who become the reason between the meetings of two people. The company has recently expanded its operations and portfolios in some other countries as well to be more worthwhile. The company's operations have been divided into three different and dominating segments which predominantly are U.S. Domestic Package Operations, International Package Operation and Supply Chain operations. The company's operations are in a very good hand which not only strives hard for its long-term success but also facilitated its employees wonderfully well. The same can be gauge from this stance that the company had only one nation strike which occurred in the year 1997 in worldwide. The company has a large and sophisticated portfolio comprises on about 400,600 employees worldwide. Out of these figure, 358,400 employees working in the United States (U.S.) while rest of the workforce dispersed in all over the world. The total assets of the company amounted to U.S.$33.597 billion while total revenue of U.S.$49.545 billion in the year 2010. The company was able to earn net income (NI) of 3.488 billion in the same year. The company's shares are actively trading in the New York Stock Exchange (NYSE) with the name of UPS. The share of the company is currently trading at a rate of U.S.$74.27 and the share of the company is very famous among the shareholders. The shareholders of the company mostly are individuals who enjoyed a consistent flow of dividend income from the company. Analysis reveals that the large number of investor likes to invest in the stocks of the company from worldwide. The biggest competitors of the company are, United States Postal Services (USPS) and FedEx. All of these companies are marginally up and down from each other. Let's now start the second section of the report which is about the financial analysis.

Section-2 Financial Ratio Analysis

Financial analysis is also referred to as Financial Statement Analysis (FSA). FSA is an assessment of the profitability, viability and the stability of an organization (David & Hussey, 2001). The usage of FSA is of manifold, as users of different sectors analyze the financial statement from different angles. The main goal of FSA is to analyze and then interpret the financial health of the organization in an understandable manner. Financial ratios computation is an activity frequently used under the umbrella of financial analysis. There are a number of categorize of the financial ratios like profitability ratios, solvency ratios, liquidity ratios and stability ratios. This section of the report is very important. In this section, ratio analysis and different categories of ratios have been analyzed in this section.

Profitability Ratios

Profitability ratios are the most widely used ratios to assess the financial capability of an organization. There are number of ratios which have been used for this specific purpose. The ratios which come under this umbrella and have been used in this paper are Net Profit Margin (NPM) and Gross Profit Margin (David, C & Johnson 2005). To do a comprehensive analysis, data of five fiscal years have been selected,

Gross Profit Margin (GPM)

GPM is one of the widely used measures in the literature of analysis. This particular ratio apprises the investor that how much the company is able to earn after subtracting the cost of good sold. High amount of GPM is always desirable for the companies. The computed GPM table along with the chart is mentioned below,

UPS GPM

Years

Total Sales

Gross Profit

GPM

in million U.S.$

in million U.S.$

2006

47,547

13,820

3.44

2007

49,692

14,014

3.55

2008

51,486

13,545

3.80

2009

45,297

10,838

4.18

2010

49,545

12,478

3.97

Mean GPM

3.787

From the table and graph, it can be seen that the GPM of the company is in a positive node. The GPM of the company increased for 4 consecutive years in 2006 to 2009. The GPM of the company was 3.44% increased by 0.11% in a year later and then again increased by 0.25% and 0.38% in the year 2008 and 2009 respectively. The GPM of the company decreased by 21 basis points in the year 2010 as compared to the same period of last year. UPS is among those companies which had least effected from the current economic downturn because of its large, sophisticated and diversified portfolio. The mean or average GPM of the company is 3.78% which means that the company is able to earn approx 4$ by investing 100$ without subtracting other expenses. This GPM is not very good but can be acceptable because it comes in the positive node. The net earnings are the important indicators for the organizations; let's now compute the Net Profit Margin (NPM) of the company.

Net Profit Margin (NPM) Analysis

A ratio of profitability calculated as net return alienated by revenues, or net profits separated by sales (David, Peter & Wyn, 2003). It measures how much out of every buck of sales a group actually keeps in earnings. NPM is one of the most widely used ratios in the finance literature. Profit margin is very effective when comparing companies in analogous industries. An advanced profit margin shows more profitable guests that has better monitor over its costs compared to its competitors. The NPM of the company has been mentioned below along with the chart.

UPS NPM

Years

Total Sales

Net Profit

NPM

in million U.S.$

in million U.S.$

2006

47,547

4,202

8.84

2007

49,692

14,014

28.20

2008

51,486

13,545

26.31

2009

45,297

10,838

23.93

2010

49,545

12,478

25.19

Mean NPM

22.492

From the table and graph, it can be said that the company is in a good financial health. The NPM of the company was very low for year (FY) 2006 manifesting a figure of 8.84% increased substantially by 19.36% in the year 2007 as compared to the same period of last year. That high increment was merely due to the increment in the sales figures. After the year 2007, the NPM of the company decreased for two consecutive years by 189 and 238 basis points FY 2008 and 2009 respectively merely due to the current economic crisis. Due to the resiliency power, the company again achieved its previous momentum of earning in the year 2010 and increased by 1.26%. The average NPM of… [END OF PREVIEW] . . . READ MORE

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