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Financial ratios for Walgreens

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Using the most current financial statements for Walgreens, calculate and compare the financial ratios listed below. The financial statements can be located on the web.

Liquidity Measures- Working capital, Current ratio, Acid test ratio

Activity Measures- Total asset turnover, Inventory turnover

Profitability Measures- Gross profit rate, Profit margin rate, Return on investment, Return on equity, Earnings per share

Financial Leverage Measures- Debt ratio, Debt/equity ratio, Times interest earned ratio

Cite strengths and weaknesses of ratios.

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Solution Preview

Please see the attached Excel spreadsheet.

Liquidity Measures

Working Capital Ratio and Current Ratio are the same

Current Ratio:
Current Assets / Current Liabilities
Current Assets 10,183.50
Current Liabilities 7,502.30
Current Ratio 1.3574

Acid Test Ratio:
Current Assets - Inventory / Current Liabilities
Current Assets 10,183.50
Current Liabilities 7,502.30
Inventory 7,063.80
Acid Test Ratio: 0.3796

Activity Measures

Total Asset Turnover:
Sales / Assets
Sales $15,015.70
Assets $21,587.60
Total Asset Turnover: $0.70

Inventory Turnover
Cost of Goods Sold / ...

Solution Summary

The solution examines the financial ratios for Walgreens. The financial ratios are calculated and compared.

$2.19