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UPS vs. FDX
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<blockquote data-quote="I GOT ONE MORE" data-source="post: 634413" data-attributes="member: 5997"><p>There is one metric catching my attention.</p><p></p><p>A coworker and I were discussing companies that were run debt free. Having very little or no debt allows a company or a person, for that matter, to make very different decisions.</p><p></p><p>Microsoft (MSFT) and Texas Instruments (TXN) were mentioned. Along with FDX an UPS.</p><p></p><p>To my surprise, UPS debt/equity ratio blew me away. Frankly, upper management must be very smart or very stupid. UPS has such a heavy flow of cash each day that financing anything seems like folly. Refer to the following brief definition of debt/equity ratio.</p><p></p><p>A measure of a company's financial leverage. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. Typically the data from the prior fiscal year is used in the calculation. Investing in a company with a higher debt/equity ratio may be riskier, especially in times of rising interest rates, due to the additional interest that has to be paid out for the debt. For example, if a company has long-term debt of $3,000 and shareholder's equity of $12,000, then the debt/equity ratio would be 3000 divided by 12000 = 0.25. It is important to realize that if the ratio is greater than 1, the majority of assets are financed through debt. If it is smaller than 1, assets are primarily financed through equity. </p><p></p><p>Debt/Equity Ratio</p><p></p><p>MSFT 0.15</p><p>TXN 0.00</p><p>FDX 0.15</p><p>UPS 1.48</p><p>AIG 2.38</p><p></p><p>I had no idea. But, I do now from a little digging. That's another thread.</p></blockquote><p></p>
[QUOTE="I GOT ONE MORE, post: 634413, member: 5997"] There is one metric catching my attention. A coworker and I were discussing companies that were run debt free. Having very little or no debt allows a company or a person, for that matter, to make very different decisions. Microsoft (MSFT) and Texas Instruments (TXN) were mentioned. Along with FDX an UPS. To my surprise, UPS debt/equity ratio blew me away. Frankly, upper management must be very smart or very stupid. UPS has such a heavy flow of cash each day that financing anything seems like folly. Refer to the following brief definition of debt/equity ratio. A measure of a company's financial leverage. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. Typically the data from the prior fiscal year is used in the calculation. Investing in a company with a higher debt/equity ratio may be riskier, especially in times of rising interest rates, due to the additional interest that has to be paid out for the debt. For example, if a company has long-term debt of $3,000 and shareholder's equity of $12,000, then the debt/equity ratio would be 3000 divided by 12000 = 0.25. It is important to realize that if the ratio is greater than 1, the majority of assets are financed through debt. If it is smaller than 1, assets are primarily financed through equity. Debt/Equity Ratio MSFT 0.15 TXN 0.00 FDX 0.15 UPS 1.48 AIG 2.38 I had no idea. But, I do now from a little digging. That's another thread. [/QUOTE]
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