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Compute, Disaggregate, and Interpret Competitors' Rates of Return Selected balance sheet and income statement information for the drug retailers CVS Health Corporation and Walgreen Co.
Compute, Disaggregate, and Interpret Competitors' Rates of Return Selected balance sheet and income statement information for the drug retailers CVS Health Corporation and Walgreen Co. follows. Assume tax rate of 35%. ($ millions) Sales revenue-2017 Interest expense-2017 Net income-2017 Total assets-2017 Total assets-2016 Stockholders' equity-2017 Stockholders' equity-2016 CVS Health Walgreen $184,765 $118,214 1,062 728 6,623 4,101 95,131 66,009 94,462 72,688 37,695 28,274 36,834 30,281 a. Compute the 2017 return on assets (ROA) for each company. (Round your answers to one decimal place.) CVS Health 5.9 % X Walgreen 5.8 % X ROA b. Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. (Round your answers to one decimal place.) CVS Health Walgreen PM 4% 3.9 % AT 1.9 1.7 C. Compute the 2017 return on equity (ROE) and return on financial leverage (ROFL) for each company. (Round your answers to one decimal place.) CVS Health Walgreen ROE 17.8 % 14% ROFL 10.8 % X 8.1 % X
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