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    Financial Statement Analysis CVS & Walgreens

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    Compare current (& past two years) financial statements for CVS & Walgreens Industry Drug Stores in accordance to the instructions below. An example is attached.


    You are the assistant to the CEO of a major company. Your CEO keeps an eye on the competition, and asks you to do the following. Using ratio analysis, compare two major competitors in the same industry.


    Pick any two U.S. public companies in the same industry.

    Select the 10 most important financial ratios for your two companies and calculate each for the last 2 fiscal years using Excel.

    Follow the same format as in the examples posted in the file attached in the Week 3 Conference for the Drugstore Chains example. Use the "Compare" worksheet. The "W", "C", "Profiles" and "Z Score" worksheets are not required, and nor is the Dupont Analysis.

    1. Create a single Excel file for your entire assignment.
    2. You may obtain financial information and the companies' latest annual reports on the web directly from MSN Money or Yahoo Finance.For additional information, look for the SEC Form10-K link from one of the MSN Money or Yahoo Finance financial sites.
    3. You should calculate, and comment upon, all 10 financial ratios for the last 2 fiscal years.
    4. All calculations should be shown, and all answers should be thoroughly explained.
    5. Whenever you use balance sheet items to calculate ratios, for each year be sure to average the beginning-of-year and end-of-year amounts to get the average for that year.
    6. What can you tell from your analysis? What are the strengths and weaknesses of each company? Which is the stronger competitor? Give your reasons.

    DrugstoreChains.xls. contains a comprehensive analysis of the financial statements of two large drugstore chains. It also shows how to predict bankruptcy with reasonable accuracy by using financial ratios. In addition, there is optional material in theattached DrugstoreChains.xls file that:

    a) Illustrates and explains how different companies succeed by focusing on different key ratios like Net Income/Sales, or Sales/Total Assets (asset turnover) or Total Assets/Common Equity (leverage).

    c) Shows the source for every number on every Excel worksheet: just click on any number in any Excel worksheet and you will see where it comes from. Showing the source for every number on every Excel worksheet is very important

    Does your answer spell out the concepts, methods and formulas that you are using? Cite their sources.

    Have you chosen the most useful 10 ratios?

    There are many more than ten financial ratios. It is important that you choose the ten most useful ratios.

    Have you explained your approaches and methods in words and correctly applied the relevant concepts and methods.

    Is there anything in it that seems odd or strange to you? Is there anything in it that relates to another seemingly concept or topic?
    Choose the ten most useful financial ratios.
    Explain your approaches and methods in words.
    Support your statements with factual evidence and logical reasoning.
    Look for anomaly, unsuspected connections, or simplifying in order to explain to someone else.

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    Solution Preview

    Please see the attached excel file.

    Companies will come and go through the years, but those that can survive in this down economy and time of recession will be able to teach other companies how they survived.

    Walgreen Co., together with its subsidiaries, operates a chain of drugstores in the United States. The drugstores sell prescription and non-prescription drugs, and general merchandise. Its general merchandise comprises household items, personal care, convenience foods, beauty care, photofinishing, candy, and seasonal items. The company provides its services through drugstore counters, as well as through mail, telephone, and the Internet. As of August 31, 2009, Walgreen operated 7,496 locations comprising 6,997 drugstores, 377 worksite facilities, 105 home care facilities, 15 specialty pharmacies, and 2 mail service facilities in 50 states, the District of Columbia, Puerto Rico, and Guam. It also owned 33 strip shopping malls. The company was founded in 1901 and is based in Deerfield, Illinois. (Yahoo, 2009)

    CVS Caremark Corporation operates as a pharmacy services company in the United States. It operates in two segments, Pharmacy Services and Retail Pharmacy. As of December 31, 2009, it operated 49 retail specialty pharmacy stores, 18 specialty mail order pharmacies, and 6 mail service pharmacies located in 25 states, Puerto Rico, and the District of Columbia. This segment operates business under the Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, CarePlus, RxAmerica, AccordantCare, and TheraCom names. The Retail Pharmacy segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, photo finishing, seasonal merchandise, greeting cards, and convenience foods through its pharmacy retail stores and online. It also provides health care services. This segment operated 7,025 retail drugstores located in 41 states and the District of Columbia; and 569 retail health care clinics in 25 states. The company has a strategic ...

    Solution Summary

    Response helps in Financial Statement Analysis CVS & Walgreens