logo image

Only higher net profit

UPS had a history of sterling customer and financial performance, with $1. 7billion of net income. It is also the market leader in the $17billion ground segment, and market challengers in the deferred segment and overnight express segment. With its price differentiation strategy, UPS was persistently able to capture its market share to as much as 32% in the express area.

From 1997 to 1999, UPS also outperformed FedEx financially, reporting not only higher net profit margins but also higher ROE compared to FedEx (Table 1). A unique cost structure leveraged on high daily package volumes and customer density from the ground segment, enable UPS to achieve higher delivery rates per hour through the advanced network routes. With an operating advantage in integrating ground and express business, UPS could deploy their assets more efficiently, thus attaining higher average ROA compared to FedEx.

Its emphasis on innovation and constant improvement, as well as expansion into other business segments such as supply chain management , ensures that their highest level of efficiency, reliability and speed is maintained. Their competence in utilizing invested funds to generate excellent returns is also a reason for its higher average ROE from 1996-1998. Thorough analysis of UPS’s multiples in

Need essay sample on "Only higher net profit"? We will write a custom essay sample specifically for you for only $ 13.90/page

individual years (Table 1) reveals that its outstanding performance was not sustainable.

Also read about profit leverage effect

UPS’s revenue growth, ROE and ROA plunged in 1999. The settlement of a high tax assessment, which amounted to $1. 8billion resulted in a much lower reported net income in 1999, hence, a lower net profit margin, ROE and ROA. The trend of declining revenue growth was partly due to rising costs and intense competition. In the long run, UPS’s trend of rising ROE is expected to revert to the mean by market forces . UPS’s sustainable growth rate, using 1998 financial data, is calculated to be 17. 78%.

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
Complete Buyer Protection
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy