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Financial ratios for Walgreens

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.

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