Hello, I need help answering these questions regarding Walgreens and CVS financial statement comparisons. Particularly requirements 7-11 and 5e and 10e and need the rest of my work checked over. I'll attach the files regarding the financial statements given to us below.

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ACG2021 Comprehensive Financial Statement Analysis Project Fall 2016 Group Members Last Name First Name Instructions: You will need the annual report for Walgreens Corporation for fiscal years 2015 and 2014. They will be provide Note that Wahlgreen's fiscal year is referenced one year back, so, for example, the 2015 fiscal year relates to t relates to the year which ended August 31, 2014. Requirement 1: Basic Questions Answer the questions for the fiscal 2015 year in the shaded input box. The location (source) where you can find the answer is provided for you above the shaded input box. Use only annual report PDF file gives you a table of contents which allows you to quickly find the sources of the informa Requirement 2 - 6: Ratio and Financial Analysis For the ratios in requirements 2 and 3, provide the formula of the ratio, the amounts used to calculate the rati boxes. The first one (a.) was completed as an illustration. The ratio formulas are listed in pages 786-787 in chapter 13 of your textbook. I have added the number of th to calculate them. When calculating the ratios, only use the amounts included in the audited financial statements (Item 8. Finan may be shown in other sections of the annual report. All other sections of the annual report except for the fin any other ratios or financial indicators are they wish, not necessarily as the textbook prescribes. If you pick up Since the fiscal 2015 financial statements are comparative, they include info for both fiscal years 2015 and 201 well. However, some ratios for the 2014 year will require you go to back an additional year because some of the 201 For example, the inventory turnover for 2014 uses average inventory calculated by using the 2014 ending inve balance in 2013). You need to obtain the fiscal 2013 ending inventory balance included in the 2014 financial st For ratios that include averages, use a simple average calculation (beginning + ending balance / 2). Requirement 7 - 11: Ratio and Financial Analysis (Walgreen's versus competitor CVS) Copy the following from the "Requirement 2 - 6" sheet to the columns on the left-hand side of the spreadshee You only need to calculate the 2015 ratio for CVS on the columns on the right-hand side of the spreadsheet. Other: Note the denomination of the amounts reported since they are in millions. So, the Cash and Cash Equivalents Certain terminology may be a bit different than what you learned in the textbook. For example, instead of Net amount reported on the Income Statement (which they call the "Statement of Earnings"). If you have any ques Several questions have multiple parts. Make sure you answer every part in order to receive full credit. Please do not add columns or rows to this file. I will be using this file to grade and my grading template is in th The points assigned to each question are included in the boxes highlighted in pink on the right-hand side of th t Analysis Project #REF! #REF! #REF! #REF! Corporation for fiscal years 2015 and 2014. They will be provided to you in pdf format. d one year back, so, for example, the 2015 fiscal year relates to the fiscal year which ended on August 31, 2015 and the 2014 fis 14. in the shaded input box. answer is provided for you above the shaded input box. Use only that source to answer the question. The Index on the second p tents which allows you to quickly find the sources of the information. e the formula of the ratio, the amounts used to calculate the ratio and what the ratio measures. Enter your answers in the shade llustration. 7 in chapter 13 of your textbook. I have added the number of the ratio listed in pages 786-787 to each ratio so that you know e unts included in the audited financial statements (Item 8. Financial Statements and Supplementary Data) ; do not just enter th report. All other sections of the annual report except for the financial statements are not audited and as such the preparer can y wish, not necessarily as the textbook prescribes. If you pick up amounts in other sections you risk getting the question wrong. comparative, they include info for both fiscal years 2015 and 2014. Use those financial statements to answer the questions abou quire you go to back an additional year because some of the 2014 ratios use averages which are calculated using the 2014 + 20 uses average inventory calculated by using the 2014 ending inventory balance + the 2014 beginning inventory balance (which is 2013 ending inventory balance included in the 2014 financial statements which have been provided to you. average calculation (beginning + ending balance / 2). Walgreen's versus competitor CVS) 6" sheet to the columns on the left-hand side of the spreadsheet: Ratio formula and actual ratio answer for Walgreen's 2015 CVS on the columns on the right-hand side of the spreadsheet. ted since they are in millions. So, the Cash and Cash Equivalents balance of "$3,000" means 3,000 million, or $3 billion. n what you learned in the textbook. For example, instead of Net Income, Walgreens reports "Net Earnings" as the final which they call the "Statement of Earnings"). If you have any questions on the terminology, please contact me. ure you answer every part in order to receive full credit. . I will be using this file to grade and my grading template is in this same format. uded in the boxes highlighted in pink on the right-hand side of the question. There are 221 points which is equivalent to 100%. Requirement 1 Answer BASIC INFORMATION about company operations and financial results for the Walgreens 2015 fiscal year. NOTE: Use amounts found in the "Source" only to answer these questions. Points a. As of August 31, 2015, how many stores did Walgreens operate in total and in how many countries? Source: Item 1. Busines - Overview 1 13,100 stores and operates in 11 countries b. What are the three reportable Segments that Walgreens has? Based on "Sales to external customers", which is the largest segment? Source: Item 8. Financial Statements- Note 19. Segment Reporting 2 retail pharmacy in USA, retail pharmacy international and pharmacetical wholesale. Retail pharmacy is the largest. c. Does Walgreens report a multi-step or single-step income statement? How do you know? Source: Item 8. Financial Statement - Consolidated Statements of Earnings 3 uses a single step income statement, because of the single column per fisical year d. What is Walgreens' largest asset? Largest liability? What is the amount of each? Source: Item 8. Financial Statement - Consolidated Balance Sheets largest asset is goodwill with total amount of $16,372. the largest liabilty is long term debtswith total amount of $13,315 2 e. How many shares of common stock are Issued? Source: Item 8. Financial Statements - Consolidated Balance Sheets 1,172,513,618 common shares were issued. 1 f. The Balance Sheets do not explicitely report "outstanding" common stock shares at August 31, 2015. However, this amount can be calculated by other information provided in the Balance Sheet. How many common stock shares were outstanding at August 31, 2015 and how did you calculate it? Source: Item 8. Financial Statements - Consolidated Balance Sheets 3 2,027,486,382 outstanding shares. Obtained by finding the difference between the shares authorized and the shares issued. g. What was the amount of the dividend declared and paid (per share) in fiscal 2015? Source: Item 8. Financial Statements - Consolidated Statements of Equity 1 $1,458 dividends decleared and retained, 0 was paid. h. When does Walgreens record revenue sold at the stores? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies: Revenue Recognition when persuasive evidence of an arrangement exists, when delivery has occurred or services have been rendered, when the seller`s price to the buyer is fixed or determined, when collectability is reasonably assurred. 1 i. What methods do Walgreens use to value its inventory (FIFO, LIFO, average, etc.) ? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies: Inventory last-in-first-out (LIFO) and first-in-first-out(FIFO) 1 j. What method does Walgreens use to depreciate its property and equipment? What are the useful lives assigned to different fixed asset categories? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Property, Plant & Equipment 1 Straight line basis over the estimateduseful live of the owned assets, the useful lives include 20 years for landimprovement, 13-50 years for building and building improvement, 3-20 years for fixtures,plants and equipment k. Calculate the percentage of Walgreens total property and equipment that has been depreciated at August 31, 2015. On average, is the property, plant and equipment that Walgreens owns fairly new or fairly old? Why? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Property, Plant & Equipment 2 1,300,000,000/15,068,000,000 x 100% = 8.63%%. The property,plant and equipment are fairly new because the percentage depreciation is relatively small l. What items are recorded as cash equivalents? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Cash & Cash Equipments 1 cash on hand and all highly liquid investment with an original maturity of 3 months or less m. What is the net Accounts Receivable balance at August 31, 2015? Source: Item 8. Financial Statements - Consolidated Balance Sheets 1 net account receivable = $ 6,849 n. Walgreens has significant Accounts Receivable balances for what you may believe is primarily a cash/credit card business. Who else then owes Walgreens these receivables? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Accounts Receivable 1 clients and members, vendors and manufacturers o. What type of financial instruments does Walgreens invest in? How do they classify these investments? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Investments 1 corporate debts, other debt securities and equity securities. They are classified as held-to maturity or the available for sale. p. On November 2014 Walgreens issued $8 billion in long-term debt. How much did Walgreens actually receive in proceeds? What are the ranges of fixed rates on this debt? Source: Item 8. Financial Statements- Note 10. Short-Term Borrowings and Long-Term Debt 2 proceeds received = $ 8.4 billion . Interest rates 5% to 8.75% q. Do the gift cards Walgreens sell expire? How would the outstanding (not redeemed yet) gift card balance be classified on the Balance Sheet and why? Source: Item 8. Financial Statements - Note 2. Summary of Major Accounting Policies- Gift Cards 3 giftcards sold in USA do not expire while those internationally have expiration date r. What activities are planned under the new restructuring "Cost Transformation" program? Source: Item 8. Financial Statements- Note 4. Restructuring plans to close approximately200 stores across U.S.A , recognize corporate and field operations, drive operating efficiencies, streamline information technology. 1 s. What company is Walgreens planning to acquire as agreed upon in October 2015? How many more stores would this acquisition add to the Walgreens portfolio? Is this a significant acquisition? Source: Item 8. Financial Statements- Note 21. Subsequent Event 1 rite aid corporation company. 4561 stores will be added asaresult. The acquisition is significant for growth purposes. t. Using a site such as www.hoovers.com or www.finance.yahoo.com, research the discount variety store industry. List three competitors of Walgreens Corporation. Source: Type in source you used here CVS HEALTH CORPORATION, RITE AID CORPORATION and WAL-MART STORES,INC. 2 u. How many employees does Walgreens have at August 31, 2015? Source: Item1. Business - Employees 1 approximately 360,000 employees v. Describe IN YOUR OWN WORDS the major business risk factor that Walgreens faces? Source: Item 1A. Risk Factors 2 the stiff competition from the above mentioned three competitors. w. In what countries in Central and South America does Walgreens operate? Source: Item 2. Properties 1 united states, puerto rico and US virgin island x. What was the cause of the increase in total sales in the Retail Pharmacy USA division? Was it because Walgreens operated more stores or that the average sales per stores increased? And by how much? Source: Item 7. Management's Discussion and Analysis: Results of Operations by Segment, Retail Pharmacy USA 2 the cause in the increase sale was the high demand, increased customer loyalty. y. Did total capital expenditures (additions to property plan and equipment) for the Retail Pharmacy USA segment increase or decrease from prior year? What is the explanation for the change? Source: Item 7. Management's Discussion and Analysis: Liquidity and Capital Resources the capital expenditure increased because of the efficiency plans put in place to improve the efficiency and the expansion strategies. 2 the capital expenditure increased because of the efficiency plans put in place to improve the efficiency and the expansion strategies. 39 Walgreens 2015 Fiscal Year as of August 31, 2015 Ratio (Refer to pgs 775 - 777 for ratio formula) Calculation of Ratio Show work Walgreens 2014 Fiscal Year as of Augus Calculation of Ratio Ratio Show work Requirement 2 Evaluate PROFITABILITY. Using information you have learned in the text and elsewhere, evaluate Walgreenls' profitability for 2015 compared with 2014. In yo you should compute the following ratios and then comment on what those ratios indicate. NOTE: Use amounts in the audited financial statements only to calculate these ratios (Item 8. of annual report). a. Rate of return on sales #13 Ratio: Net income / Net sales 4.1% $ $ 4,279 103,444 $ $ 2,031 76,392 Did the ratio increase or decrease? Is that positive or negative? Why? The ratio decreased. This is negative because each dollar of sales produced less income. b. Asset turnover #14 23 days Ratio: 19389600/ 278900 cost incurred on assets/averrage inventory 234549990/ 890021 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio increased, this is negative because the number of days taken to collect assets increased. c. Rate of return on assets (#15 non-DuPont model) 5.6% Ratio: 2160/37,250 3870/68782 net income/average assets Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, this shows that the assets were underutilised as compared to the previous year. the ratio is p d. Rate of return on equity (#17 non-DuPont model) 15.4% Ratio: 3870 / 25089 net income/average equity 2160 / 22327 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio inreased,this is positive because the return on capital financed by the equity increased e. Gross margin percentage #10 21.0% Ratio: net income/total operting income 37250/2570 2450 / 3420 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio deceased , this negative because the profit margin went down. f. Earnings per share #18 (do NOT use one shown on the income statement, calculate yourself using simple average of outstanding shares) 2.53% Ratio: 37250-2560/67900 31452-2170/5620 net income- preferred dividends/weighted share. Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, this is negative, showing that the shares were sold at a discount or low price than the previo g. Generally, are these indicators positive or negative? What trend(s) do you deduce from this analysis? the ratio generally decreased, meaning than the general level of the profit went down for the walgreen company. The trend is downward. Requirement 3 Evaluate the company's ABILITY TO SELL INVENTORY AND PAY DEBTS during 2015 and 2014. In your analysis, you should compute the following ratios, and t comment on what those ratios indicate. NOTE: Use amounts in the audited financial statements only to calculate these ratios (Item 8. of annual report). a. Inventory turnover & days inventory outstanding #3 Turnover 0.12 Days 12 Ratio: 45679/78639 678900/ 3456 cost of goods sold/inventory c Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, this is negative because more days taken to recover the inventory b. Receivable turnover & days sales outstanding #4 - 5 Turnover 0,54 Days 54 Ratio: 700785420/678990 net sale/ average receivable balance 65888900/766873 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, because more days were taken for walgreen to receive the receivables c. Accounts payable turnover & days payable outstanding #6 Turnover 0.55 Days 55 Ratio: 690035/ 56700 note payable/average payments 5470000/63700 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio inreased, because the company took more days to make payments d. Current ratio #1 1.19 Ratio: 12242/ 8895 current assets/current liabilities 19675/16557 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, the ability of the firm to meet the short term obligations fall. e. Quick (acid-test) ratio #2 Ratio: cash + marketable securities/cuurent liabilties 1.27 357700/ 4637 367880/ 267890 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio decreased, this is negative because the ability to meet the unexpected obligations wents down. th f. Debt ratio #8 Ratio: total liabilities/ total assets 0.79 54780/68782 487,299/37250 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio increased, this is positive because the company has covered all the assets. f. Times interest earned #9 Ratio: net income + interest expense/interest income 0.65 37200+ 1200/23400 26700+ 1006/21900 Did the ratio increase or decrease? Is that positive or negative? Why? the ratio increased, the ratio is positive. g. Generally, are these indicators positive or negative? What trend(s) do you deduce from this analysis? the indicators are generally positive, showing that the company is able to finance the debts. Requirement 4 Evaluate Walgreens' CASH FLOW. a. Does Wagreens use a Direct or Indirect method to calculate Operating Cash Flow b. For 2015, was cash provided by, or used in, operations? direct used in opertions c. For 2015, is Walgreenls' net Cash Flow from Operations greater than or less than Income from Operations? What is the primary cause of the difference? the cash flow from operatios is greater than the income from operations. Because the operations involved wide perspctive. d. For 2015, what is the primary source of cash from Investing Activities? Is this the same as in 2014 and 2013? If not, state the primary source(s) of cash from investing 2014 and 2013. the primar source of investing activities was the goodwill and warrants e. For 2015, what is the primary source of cash from Financing Activities? Is this the same as in 2014 and 2013? If not, state the primary source(s) of cash from financing 2014 and 2013. primary source of cash financing is the revenue generated from the service rendered. Requirement 5 OTHER FINANCIAL ANALYSIS. a. Total sales for the Retail Pharmacy USA segment was $76,392 in 2014 and $80,974 in 2015. Has Walgreens been able to generate increased revenues from 2014 to 20 outpace inflation? Provide explanation. Reference the source of your inflation data. yes walgreen has generated from 2015 to outpace the inflation because of the increased level of sales. b (1). What was the closing market price of Walgreens' Corporation stock on September 1, 2015, the next trading day after the balance sheet date of August 31, 2015? $673,000.00 b (2). What is the book value per share on August 31, 2015? (ratio #21) Ratio: $0.48 672000-23900/20 purchase value-depreciationumber of useful lives b (3). What is the difference between the Walgreens market price from b(1). above and the book value from b(2). above? What factors could be explain this difference? the difference is in the terms of the price, one is overvalued and one is undervalued. c (1). How much was the dividend declared per share (from Requirement 1, g. ) c (2). How much was the earnings per share (calculated above in Requirement 2, f. ) $6,849.00 $3,280 c (3). What percent of the earnings per share was distributed as a dividend ? Is Walgreens distributing significant earnings to their shareholders? 16.100$ was distributed, however it was retained and re-invested in the business d. Prepare vertical analysis forWalgreens Companies e. Prepare horizontal analysis for Walgreens Companies Refer to separate sheet Refer to separate sheet Requirement 6 Overall, determine the financial health of Walgreens based on the information gathered from requirements 2 - 5 above. Provide specific reasons as to why. the financial health of walgreen is fairly good 4 Fiscal Year as of August 31, 2014 ation of Ratio ow work Ratio Points mpared with 2014. In your analysis, 2.7%