Refer to the annual report of CVS Corporation and the financial statements of Southwest Airlines Co. in the Supplement to Chapter 1.

1. Compute the return on equity for both companies for fiscal 2004 and 2003.

Total stockholders’ equity for CVS and Southwest in 2002 was $5,197.0 million and $4,422 million, respectively.

2. Did either company purchase treasury stock during these years? How will the purchase of treasury stock affect return on equity and earnings per share?

3. Did either company issue stock during these years? What are the details?

4. Compare the dividend policy of the two companies.

Ethical Dilemma Case Ethics, Management Compensation, and Treasury Stock