Working Capital and Financial Environment Paper UPS VS. FedEx

Essay by ejames1911University, Bachelor'sA+, June 2007

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FedEx and UPS are the two largest shipping companies in the world. From the early inception of each company, they have both had to face many obstacles. In today's world, the biggest challenge each faces is each other. This paper will examine elements of working capital for the most recent fiscal year, functions of intermediaries and financial regulatory bodies with the company, and the importance of control programs and effective internal control techniques to the selected organization.

Working CapitalFedEx has a total working capital of $2,715,068.00 each day. This was figured out by subtracting the total assets $6,464,000,000.00 from the total liabilities $5,473,000,000.00 then dividing by 365 to get the total daily working capital. UPS has a daily working capital of $7,282,191.00, this equating from an annual working capital of $2,658,000,000.00. The following graphs, retrieved from UPS and FedEx's websites, shows the working capital in relation to assets and liabilities.

Fed ExASSETSCurrent AssetsCash and cash equivalents$ 1,937Receivables, less allowances of $144 and $125 3,516Spare parts, supplies and fuel, less allowances of $150 and $142 308Deferred income taxes 539Prepaid expenses and other 164Total current assets 6,464LIABILITIES AND STOCKHOLDERS' INVESTMENTCurrent LiabilitiesCurrent portion of long-term debt$ 850Accrued salaries and employee benefits 1,325Accounts payable 1,908Accrued expenses 1,390Total current liabilities 5,473UPSControl ProgramsAll organizations use control activities or control procedures to "provide reasonable assurance that the company's established will be met and that financial reports are accurate" (Albrecht, Stice, Stice, Swain, 2005). Control activities may fall under five different categories, segregation of duties to improve efficiency through specialization of activities, proper procedures for authorization to reduce errors in transactions, documentation and records, physical control over assets and records, and independent checks on performance.

UPS Control ProgramsThe United Parcel Service believes they have accurate and effective methods of controlling and recording their financial decisions. In...