The following information was taken from the 2019 annual reports of Wal greens and CVS, competing drug
Question:
The following information was taken from the 2019 annual reports of Wal greens and CVS, competing drug store chains (dollars in millions):
INSTRUCTIONS:
Compute the conservatism ratios for both companies and comment on the differences. Would you consider them to be conservative or aggressive in their reporting? Which company is more conservative, and why?
Transcribed Image Text:
Walgreens CVS Net income before taxes $4,527 8,997 Income tax expense: Current 488 3,015 Deferred 100 (649) Total $588 $2,366 Effective tax rate 0.130 0.263
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The conservatism ratio is a measure of a companys tendency to anticipate potential losses and expens...View the full answer
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