Walgreens vs. CVS financial analysis

Calculate the following ratios and filled in the worksheet for ratios. You must show your work.

		Walgreens 8/31/20	CVS 12/31/19	EXPLAIN (What do the results of this ratiomean in the context of Walgreens? How about CVS? Compare the two - why are they different (be as specific as possible)
A	Net Working Capital
B	Current ratio
C	Quick ratio
D	Gross Profit ($ and %)
E	Debt ratio
F	Accounts Receivable Turnover
G	Inventory Turnover
H	EPS
I	ROE
J	Market cap
K	Free Cash Flow

2. Using Walgreens financials, calculate a horizontal analysis ($ and %) on the income statement including gross profit (you will have to calculate). I recommend using EXCEL spreadsheet to do this question.

2a. Using Walgreens financials, then do the vertical analysis for the balance sheet for 2018 and 2017). I recommend using EXCEL spreadsheet to do this question.

2b. What do you notice about the change from year to year on income statement and the change in the balances compared to the prior year? Be as specific as possible.

3. Which company would you invest, Walgreens or CVS, based on the financial statement analysis? Give me at least two sentences on how much and why.

CVS financials

Walgreens financials

Consolidated Statements of Operations For the Years Ended December 31, 2019 2018 2017 S $ S 185,236 63,122 7,407 1,011 256,776 183,910 8,184 1,825 660 180,063 3,558 1,144 21 194,579 184,786 158,719 52,529 In millions, except per share amounts Revenues: Products Premiums Services Net investment income Total revenues Operating costs: Cost of products sold Benefit costs Goodwill impairments Operating expenses Total operating costs Operating income Interest expense Loss on early extinguishment of debt Other expense (income) Income before income tax provision Income tax provision Income (loss) from continuing operations Loss from discontinued operations, net of tax Net income (loss) Net (income) loss attributable to noncontrolling interests Net income (loss) attributable to CVS Health 33,541 244,789 11,987 3,035 156,447 6,594 6,149 21,368 190,558 4,021 2,619 153,448 2,810 181 18,809 175,248 9,538 1,062 79 208 (124) 8,997 2,366 6,631 (4) 1,406 2,002 (596) 8,268 1,637 6,631 3 6,634 (596) 2 6,631 (8) 6,623 (1) 6,622 S $ (594) S S 5.10 $ S $ (0.57) S S (0.57) S 1,044 6.48 (0.01) 6.47 1,020 S 5.10 $ 1,301 Basic earnings (loss) per share: Income (loss) from continuing operations attributable to CVS Health Loss from discontinued operations attributable to CVS Health Net income (loss) attributable to CVS Health Weighted average basic shares outstanding Diluted earnings (loss) per share: Income (loss) from continuing operations attributable to CVS Health Loss from discontinued operations attributable to CVS Health Net income (loss) attributable to CVS Health Weighted average diluted shares outstanding Dividends declared per share $ 5.08 $ (0.57) $ S $ S 6.45 (0.01) 6.44 S 5.08 $ 1,305 2.00 (0.57) S 1,044 2.00 S 1,024 2.00 S $ See accompanying notes to consolidated financial statements. Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2019 2018 2017 $ 6,631 $ (596) $ 6,623 677 162 In millions Net income (loss) Other comprehensive income (loss), net of tax: Net unrealized investment gains Foreign currency translation adjustments Net cash flow hedges Pension and other postretirement benefits Other comprehensive income Comprehensive income (loss) Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income (loss) attributable to CVS Health (33) 111 97 (29) 330 (124) 274 (322) (2) (10) 152 917 140 7,548 3 2 6,763 (1) 6,762 $ 7,551 $ (320) $ See accompanying notes to consolidated financial statements. Consolidated Balance Sheets At December 31, 2019 2018 $ $ 5,683 2,373 19,617 17,516 In millions, except per share amounts Assets: Cash and cash equivalents Investments Accounts receivable, net Inventories Other current assets Total current assets Long-term investments Property and equipment, net Operating lease right-of-use assets Goodwill Intangible assets, net Separate accounts assets Other assets 4,059 2,522 17,631 16,450 4,581 45,243 15,732 11,349 5,113 50,302 17,314 12,044 20,860 79,749 33,121 4,459 4,600 222,449 78,678 36,524 3,884 5,046 196,456 Total assets $ $ $ $ 10,492 13,601 6,879 2,991 12,133 1,830 1,596 8,925 11,365 6,147 2,939 10,711 1,937 720 Liabilities: Accounts payable Pharmacy claims and discounts payable Health care costs payable Policyholders' funds Accrued expenses Other insurance liabilities Current portion of operating lease liabilities Short-term debt Current portion of long-term debt Total current liabilities Long-term operating lease liabilities Long-term debt Deferred income taxes Separate accounts liabilities Other long-term insurance liabilities Other long-term liabilities Total liabilities Commitments and contingencies (Note 16) 1,265 44,009 3,781 53,303 18,926 64,699 7,294 4,459 7,436 2,162 71,444 7,677 3,884 8,119 2,780 137,913 158,279 Shareholders' equity: Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding Common stock, par value $0.01: 3,200 shares authorized; 1,727 shares issued and 1,302 shares outstanding at December 31, 2019 and 1,720 shares issued and 1,295 shares outstanding at December 31, 2018 and capital surplus Treasury stock, at cost: 425 shares at both December 31, 2019 and 2018 Retained earnings 45,972 (28,235) 45,108 45,440 (28,228) 40,911 102 Accumulated other comprehensive income Total CVS Health shareholders' equity Noncontrolling interests Total shareholders' equity Total liabilities and shareholders' equity 1,019 63,864 306 64,170 222,449 $ 58,225 318 58,543 196,456 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows For the Years Ended December 31, 2019 2018 2017 $ $ $ In millions Cash flows from operating activities: Cash receipts from customers Cash paid for inventory and prescriptions dispensed by retail network pharmacies Insurance benefits paid Cash paid to other suppliers and employees Interest and investment income received Interest paid Income taxes paid Net cash provided by operating activities 248,393 (149,655) (52,242) (28,932) 955 (2,954) (2,717) 12,848 186,519 (148,981) 6,897) (17,234) 644 (2,803) (2,383) 8,865 176,594 (146,469) (2,810) (15,348) 21 (1,072) (2,909) 8,007 61 Cash flows from investing activities: Proceeds from sales and maturities of investments Purchases of investments Purchases of property and equipment Proceeds from sale-leaseback transactions Acquisitions (net of cash acquired) Proceeds from sale of subsidiary and other assets Other Net cash used in investing activities 7,049 (7,534) (2,457) 5 (444) 817 (692) (2,037) (137) (1,918) 265 (1,181) (42,226) 832 21 42 33 (3,339) (43,285) (2,877) (598) (720) 3,736 (8,336) (25) (556) 44,343 (5,522) 446 Cash flows from financing activities: Net repayments of short-term debt Proceeds from issuance of long-term debt Repayments of long-term debt Derivative settlements Repurchase of common stock Dividends paid Proceeds from exercise of stock options Payments for taxes related to net share settlement of equity awards Other Net cash provided by (used in) financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at the beginning of the period Cash, cash equivalents and restricted cash at the end of the period (2,603) 210 (112) (4,361) (2,049) 329 (71) (1) (6,751) (2,038) 242 (97) 1 36,819 (4) 2,395 1,900 4,295 (7,850) 1 1,659 4,295 5,954 (1,620) 3,520 1,900 $ $ $ For the Years Ended December 31, 2019 2018 2017 $ 6,631 $ (596) $ 6,623 4,371 2,718 6,149 2,479 181 187 453 280 234 86 In millions Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Goodwill impairments Loss on settlement of defined benefit pension plans Stock-based compensation Loss on sale of subsidiary Loss on early extinguishment of debt Deferred income taxes Other noncash items Change in operating assets and liabilities, net of effects from acquisitions: Accounts receivable, net Inventories Other assets Accounts payable and pharmacy claims and discounts payable Health care costs payable and other insurance liabilities Other liabilities Net cash provided by operating activities 205 79 (654) 264 87 (1,334) 53 253 (2,158) (1,075) (614) 3,550 320 1,476 12,848 (1,139) (1,153) (3) 2,329 (311) 165 (941) (514) (338) 1,710 (333) 8,007 $ $ 8,865 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Shareholders' Equity Number of shares outstanding Common Treasury Shares Shares (1) Attributable to CVS Health Common Accumulated Stock and Other Capital Treasury Retained Comprehensive Surplus (2) Stock Earnings Income (Loss) Total CVS Health Shareholders' Equity Noncontrolling Interests Total Shareholders Equity In millions Balance at December 31, 2016 1,705 (644) $ 31,635 $ (33,483) S 38,983 $ (305) S 36,830 $ 4 s 36,834 6,622 6,622 1 6,623 140 140 140 7 461 461 461 1 (54) (4,313) | | || (4,313) (2,049) (4,313) (2,049) (2,049) (1) (1) Net income Other comprehensive income (Note 13) Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances Common stock dividends Other decreases in noncontrolling interests Balance at December 31, 2017 Adoption of new accounting standards (3) Net loss Other comprehensive income (Note 13) Common shares issued to acquire Aetna Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances 1,712 (698) 32,096 (37,796) 43,556 (165) 37,691 4 37,695 (6) (13) (13) (594) (594) (2) (596) 274 274 274 274 12,923 9,561 IT 22,484 22,484 8 421 - 421 421 (1) 7 7 7 J (2,045) (2,045) (2,045) 329 329 1 - Common stock dividends Acquisition of noncontrolling interests Other decreases in noncontrolling interests Balance at December 31, 2018 Adoption of new accounting standards (Note 1) (13) (13) 1,720 (425) 45,440 (28,228) 40,911 102 58,225 318 58,543 178 178 178 | | | 6,634 6,634 (3) 6,631 917 917 917 Net income (loss) Other comprehensive income (Note 13) Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances 7 2 532 532 532 (2) (7) (7) (7) | | | (2,615) (2,615) (2,615) Common stock dividends Other decreases in noncontrolling interests Balance at December 31, 2019 (9) (9) 1,727 (425) 45,972 $ (28,235) S 45,108 $ 1,019 63,864 $ 306 S 64,170 2020 2019 S 516 $ 7,132 9,451 974 18,073 1,023 7,226 9,333 1,118 18,700 Assets Current assets: Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets Non-current assets: Property, plant and equipment, net Operating lease right-of-use asset Goodwill Intangible assets, net Equity method investments (see note 5) Other non-current assets Total non-current assets 13,478 13,342 21,724 15,268 10,753 7,338 16,560 10,876 6,851 1,133 48,899 67,598 677 69,101 Total assets $ 87,174 $ S 5,738 14,341 3,538 $ 14,458 2,426 6,539 110 27,070 5,474 216 25,769 11,098 Liabilities and equity Current liabilities: Short-term debt Trade accounts payable (see note 18) Operating lease obligation Accrued expenses and other liabilities Income taxes Total current liabilities Non-current liabilities: Long-term debt Operating lease obligation Deferred income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies (see note 10) Equity: Preferred stock $.01 par value; authorized 32 million shares, none issued Common stock $.01 par value; authorized 3.2 billion shares; issued 1,172,513,618 at August 31, 2020 and 2019 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost; 306,910,099 shares at August 31, 2020 and 277,126,116 shares at August 31, 2019 Total Walgreens Boots Alliance, Inc. shareholders' equity Noncontrolling interests 12,203 21,973 1,498 3,294 38,968 1,785 4,795 17,678 12 12 10,761 34,210 10,639 35,815 (3,897) (3,771) (20,575) 20,637 498 (19,057) 23,512 641 Total equity Total liabilities and equity 21,136 87,174 $ 24,152 67,598 $ WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS For the years ended August 31, 2020, 2019 and 2018 (in millions, except per share amounts) 2020 S 139,537 $ 111,520 28,017 2019 2018 Sales Cost of sales Gross profit 136,866 $ 106,790 30,076 131,537 100,745 30,792 Selling, general and administrative expenses Equity earnings in AmerisourceBergen Operating income 27,045 341 1,312 25,242 164 4,998 24,694 191 6,289 70 233 302 Other income Earnings before interest and income tax provision 1,382 5,231 6,591 639 704 616 5,975 743 360 Interest expense, net Earnings before income tax provision Income tax provision Post tax earnings from other equity method investments Net earnings Net (loss) earnings attributable to noncontrolling interests Net earnings attributable to Walgreens Boots Alliance, Inc. 4,527 588 23 998 54 41 424 (32) 3,962 (20) 5,031 7 $ 456 $ 3,982 $ 5,024 Net earnings per common share: Basic S 4.32 $ 5.07 0.52 $ 0.52 $ Diluted S 4.31 $ 5.05 Weighted average common shares outstanding: Basic Diluted 921.5 879.4 880.3 991.0 995.0 923.5 WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended August 31, 2020, 2019 and 2018 (in millions) 2020 2019 2018 Comprehensive income: Net earnings 424 $ 3,962 $ 5,031 240 (149) 5 3 Other comprehensive income (loss), net of tax: Pension/postretirement obligations Unrealized gain on cash flow hedges Net investment hedges (see note 15) Share of other comprehensive income (loss) of equity method investments Currency translation adjustments Total other comprehensive income (loss) Total comprehensive income (700) (6) (90) (14) 958 55 5 (198) (1) (820) (909) 3,053 148 50 572 5,081 (10) (33) 8 Comprehensive income (loss) attributable to noncontrolling interests Comprehensive income attributable to Walgreens Boots Alliance, Inc. $ 582 $ 3,086 $ 5,073 The accompanying notes to Consolidated Financial Statements are an integral part of these Statements. (in millions) 2020 2019 2018 $ 424 $ 3,962 $ 5,031 1,927 2,038 (43) 137 (382) 100 119 (187) 1,770 (337) (322) 130 (244) 2,016 464 302 296 163 63 (31) (25) 1,008 (221) (16) 5,484 (789) 141 (112) 954 (374) (406) (154) 5,594 (391) 331 (22) 1,352 287 694 (311) 8,263 Cash flows from operating activities: Net carnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Gain on previously held equity interest Deferred income taxes Stock compensation expense Equity carnings from equity method investments Goodwill and intangible asset impairment Other Changes in operating assets and liabilities: Accounts receivable, net Inventories Other current assets Trade accounts payable Accrued expenses and other liabilities Income taxes Other non-current assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Additions to property, plant and equipment Proceeds from sale leaseback transactions Proceeds from sale of other assets Business, investment and asset acquisitions, net of cash acquired Other Net cash used for investing activities Cash flows from financing activities: Net change in short-term debt with maturities of 3 months or less Proceeds from debt Payments of debt Stock purchases Proceeds related to employee stock plans Cash dividends paid Other Net cash used for financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Changes in cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period (1,367) (1,374) 724 90 (1,702) 3 117 (741) 16 (2,307) (718) (19) (1,297) 655 (4,793) 4 (5,501) (161) 20,367 (21,414) (1,589) 55 (1,747) (157) (4,647) 536 12,433 (10,461) (4,160) 174 (1,643) 75 (3,047) 586 5,900 (4,890) (5,228) 174 (1,739) (98) (5,295) (1) (9) 11 232 (460) 1,207 746 975 1,207 (2,522) 3,496 975 $ $ Consolidated Statements of Operations For the Years Ended December 31, 2019 2018 2017 S $ S 185,236 63,122 7,407 1,011 256,776 183,910 8,184 1,825 660 180,063 3,558 1,144 21 194,579 184,786 158,719 52,529 In millions, except per share amounts Revenues: Products Premiums Services Net investment income Total revenues Operating costs: Cost of products sold Benefit costs Goodwill impairments Operating expenses Total operating costs Operating income Interest expense Loss on early extinguishment of debt Other expense (income) Income before income tax provision Income tax provision Income (loss) from continuing operations Loss from discontinued operations, net of tax Net income (loss) Net (income) loss attributable to noncontrolling interests Net income (loss) attributable to CVS Health 33,541 244,789 11,987 3,035 156,447 6,594 6,149 21,368 190,558 4,021 2,619 153,448 2,810 181 18,809 175,248 9,538 1,062 79 208 (124) 8,997 2,366 6,631 (4) 1,406 2,002 (596) 8,268 1,637 6,631 3 6,634 (596) 2 6,631 (8) 6,623 (1) 6,622 S $ (594) S S 5.10 $ S $ (0.57) S S (0.57) S 1,044 6.48 (0.01) 6.47 1,020 S 5.10 $ 1,301 Basic earnings (loss) per share: Income (loss) from continuing operations attributable to CVS Health Loss from discontinued operations attributable to CVS Health Net income (loss) attributable to CVS Health Weighted average basic shares outstanding Diluted earnings (loss) per share: Income (loss) from continuing operations attributable to CVS Health Loss from discontinued operations attributable to CVS Health Net income (loss) attributable to CVS Health Weighted average diluted shares outstanding Dividends declared per share $ 5.08 $ (0.57) $ S $ S 6.45 (0.01) 6.44 S 5.08 $ 1,305 2.00 (0.57) S 1,044 2.00 S 1,024 2.00 S $ See accompanying notes to consolidated financial statements. Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2019 2018 2017 $ 6,631 $ (596) $ 6,623 677 162 In millions Net income (loss) Other comprehensive income (loss), net of tax: Net unrealized investment gains Foreign currency translation adjustments Net cash flow hedges Pension and other postretirement benefits Other comprehensive income Comprehensive income (loss) Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income (loss) attributable to CVS Health (33) 111 97 (29) 330 (124) 274 (322) (2) (10) 152 917 140 7,548 3 2 6,763 (1) 6,762 $ 7,551 $ (320) $ See accompanying notes to consolidated financial statements. Consolidated Balance Sheets At December 31, 2019 2018 $ $ 5,683 2,373 19,617 17,516 In millions, except per share amounts Assets: Cash and cash equivalents Investments Accounts receivable, net Inventories Other current assets Total current assets Long-term investments Property and equipment, net Operating lease right-of-use assets Goodwill Intangible assets, net Separate accounts assets Other assets 4,059 2,522 17,631 16,450 4,581 45,243 15,732 11,349 5,113 50,302 17,314 12,044 20,860 79,749 33,121 4,459 4,600 222,449 78,678 36,524 3,884 5,046 196,456 Total assets $ $ $ $ 10,492 13,601 6,879 2,991 12,133 1,830 1,596 8,925 11,365 6,147 2,939 10,711 1,937 720 Liabilities: Accounts payable Pharmacy claims and discounts payable Health care costs payable Policyholders' funds Accrued expenses Other insurance liabilities Current portion of operating lease liabilities Short-term debt Current portion of long-term debt Total current liabilities Long-term operating lease liabilities Long-term debt Deferred income taxes Separate accounts liabilities Other long-term insurance liabilities Other long-term liabilities Total liabilities Commitments and contingencies (Note 16) 1,265 44,009 3,781 53,303 18,926 64,699 7,294 4,459 7,436 2,162 71,444 7,677 3,884 8,119 2,780 137,913 158,279 Shareholders' equity: Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding Common stock, par value $0.01: 3,200 shares authorized; 1,727 shares issued and 1,302 shares outstanding at December 31, 2019 and 1,720 shares issued and 1,295 shares outstanding at December 31, 2018 and capital surplus Treasury stock, at cost: 425 shares at both December 31, 2019 and 2018 Retained earnings 45,972 (28,235) 45,108 45,440 (28,228) 40,911 102 Accumulated other comprehensive income Total CVS Health shareholders' equity Noncontrolling interests Total shareholders' equity Total liabilities and shareholders' equity 1,019 63,864 306 64,170 222,449 $ 58,225 318 58,543 196,456 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows For the Years Ended December 31, 2019 2018 2017 $ $ $ In millions Cash flows from operating activities: Cash receipts from customers Cash paid for inventory and prescriptions dispensed by retail network pharmacies Insurance benefits paid Cash paid to other suppliers and employees Interest and investment income received Interest paid Income taxes paid Net cash provided by operating activities 248,393 (149,655) (52,242) (28,932) 955 (2,954) (2,717) 12,848 186,519 (148,981) 6,897) (17,234) 644 (2,803) (2,383) 8,865 176,594 (146,469) (2,810) (15,348) 21 (1,072) (2,909) 8,007 61 Cash flows from investing activities: Proceeds from sales and maturities of investments Purchases of investments Purchases of property and equipment Proceeds from sale-leaseback transactions Acquisitions (net of cash acquired) Proceeds from sale of subsidiary and other assets Other Net cash used in investing activities 7,049 (7,534) (2,457) 5 (444) 817 (692) (2,037) (137) (1,918) 265 (1,181) (42,226) 832 21 42 33 (3,339) (43,285) (2,877) (598) (720) 3,736 (8,336) (25) (556) 44,343 (5,522) 446 Cash flows from financing activities: Net repayments of short-term debt Proceeds from issuance of long-term debt Repayments of long-term debt Derivative settlements Repurchase of common stock Dividends paid Proceeds from exercise of stock options Payments for taxes related to net share settlement of equity awards Other Net cash provided by (used in) financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at the beginning of the period Cash, cash equivalents and restricted cash at the end of the period (2,603) 210 (112) (4,361) (2,049) 329 (71) (1) (6,751) (2,038) 242 (97) 1 36,819 (4) 2,395 1,900 4,295 (7,850) 1 1,659 4,295 5,954 (1,620) 3,520 1,900 $ $ $ For the Years Ended December 31, 2019 2018 2017 $ 6,631 $ (596) $ 6,623 4,371 2,718 6,149 2,479 181 187 453 280 234 86 In millions Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Goodwill impairments Loss on settlement of defined benefit pension plans Stock-based compensation Loss on sale of subsidiary Loss on early extinguishment of debt Deferred income taxes Other noncash items Change in operating assets and liabilities, net of effects from acquisitions: Accounts receivable, net Inventories Other assets Accounts payable and pharmacy claims and discounts payable Health care costs payable and other insurance liabilities Other liabilities Net cash provided by operating activities 205 79 (654) 264 87 (1,334) 53 253 (2,158) (1,075) (614) 3,550 320 1,476 12,848 (1,139) (1,153) (3) 2,329 (311) 165 (941) (514) (338) 1,710 (333) 8,007 $ $ 8,865 $ See accompanying notes to consolidated financial statements. Consolidated Statements of Shareholders' Equity Number of shares outstanding Common Treasury Shares Shares (1) Attributable to CVS Health Common Accumulated Stock and Other Capital Treasury Retained Comprehensive Surplus (2) Stock Earnings Income (Loss) Total CVS Health Shareholders' Equity Noncontrolling Interests Total Shareholders Equity In millions Balance at December 31, 2016 1,705 (644) $ 31,635 $ (33,483) S 38,983 $ (305) S 36,830 $ 4 s 36,834 6,622 6,622 1 6,623 140 140 140 7 461 461 461 1 (54) (4,313) | | || (4,313) (2,049) (4,313) (2,049) (2,049) (1) (1) Net income Other comprehensive income (Note 13) Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances Common stock dividends Other decreases in noncontrolling interests Balance at December 31, 2017 Adoption of new accounting standards (3) Net loss Other comprehensive income (Note 13) Common shares issued to acquire Aetna Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances 1,712 (698) 32,096 (37,796) 43,556 (165) 37,691 4 37,695 (6) (13) (13) (594) (594) (2) (596) 274 274 274 274 12,923 9,561 IT 22,484 22,484 8 421 - 421 421 (1) 7 7 7 J (2,045) (2,045) (2,045) 329 329 1 - Common stock dividends Acquisition of noncontrolling interests Other decreases in noncontrolling interests Balance at December 31, 2018 Adoption of new accounting standards (Note 1) (13) (13) 1,720 (425) 45,440 (28,228) 40,911 102 58,225 318 58,543 178 178 178 | | | 6,634 6,634 (3) 6,631 917 917 917 Net income (loss) Other comprehensive income (Note 13) Stock option activity, stock awards and other Purchase of treasury shares, net of ESPP issuances 7 2 532 532 532 (2) (7) (7) (7) | | | (2,615) (2,615) (2,615) Common stock dividends Other decreases in noncontrolling interests Balance at December 31, 2019 (9) (9) 1,727 (425) 45,972 $ (28,235) S 45,108 $ 1,019 63,864 $ 306 S 64,170 2020 2019 S 516 $ 7,132 9,451 974 18,073 1,023 7,226 9,333 1,118 18,700 Assets Current assets: Cash and cash equivalents Accounts receivable, net Inventories Other current assets Total current assets Non-current assets: Property, plant and equipment, net Operating lease right-of-use asset Goodwill Intangible assets, net Equity method investments (see note 5) Other non-current assets Total non-current assets 13,478 13,342 21,724 15,268 10,753 7,338 16,560 10,876 6,851 1,133 48,899 67,598 677 69,101 Total assets $ 87,174 $ S 5,738 14,341 3,538 $ 14,458 2,426 6,539 110 27,070 5,474 216 25,769 11,098 Liabilities and equity Current liabilities: Short-term debt Trade accounts payable (see note 18) Operating lease obligation Accrued expenses and other liabilities Income taxes Total current liabilities Non-current liabilities: Long-term debt Operating lease obligation Deferred income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies (see note 10) Equity: Preferred stock $.01 par value; authorized 32 million shares, none issued Common stock $.01 par value; authorized 3.2 billion shares; issued 1,172,513,618 at August 31, 2020 and 2019 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost; 306,910,099 shares at August 31, 2020 and 277,126,116 shares at August 31, 2019 Total Walgreens Boots Alliance, Inc. shareholders' equity Noncontrolling interests 12,203 21,973 1,498 3,294 38,968 1,785 4,795 17,678 12 12 10,761 34,210 10,639 35,815 (3,897) (3,771) (20,575) 20,637 498 (19,057) 23,512 641 Total equity Total liabilities and equity 21,136 87,174 $ 24,152 67,598 $ WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS For the years ended August 31, 2020, 2019 and 2018 (in millions, except per share amounts) 2020 S 139,537 $ 111,520 28,017 2019 2018 Sales Cost of sales Gross profit 136,866 $ 106,790 30,076 131,537 100,745 30,792 Selling, general and administrative expenses Equity earnings in AmerisourceBergen Operating income 27,045 341 1,312 25,242 164 4,998 24,694 191 6,289 70 233 302 Other income Earnings before interest and income tax provision 1,382 5,231 6,591 639 704 616 5,975 743 360 Interest expense, net Earnings before income tax provision Income tax provision Post tax earnings from other equity method investments Net earnings Net (loss) earnings attributable to noncontrolling interests Net earnings attributable to Walgreens Boots Alliance, Inc. 4,527 588 23 998 54 41 424 (32) 3,962 (20) 5,031 7 $ 456 $ 3,982 $ 5,024 Net earnings per common share: Basic S 4.32 $ 5.07 0.52 $ 0.52 $ Diluted S 4.31 $ 5.05 Weighted average common shares outstanding: Basic Diluted 921.5 879.4 880.3 991.0 995.0 923.5 WALGREENS BOOTS ALLIANCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended August 31, 2020, 2019 and 2018 (in millions) 2020 2019 2018 Comprehensive income: Net earnings 424 $ 3,962 $ 5,031 240 (149) 5 3 Other comprehensive income (loss), net of tax: Pension/postretirement obligations Unrealized gain on cash flow hedges Net investment hedges (see note 15) Share of other comprehensive income (loss) of equity method investments Currency translation adjustments Total other comprehensive income (loss) Total comprehensive income (700) (6) (90) (14) 958 55 5 (198) (1) (820) (909) 3,053 148 50 572 5,081 (10) (33) 8 Comprehensive income (loss) attributable to noncontrolling interests Comprehensive income attributable to Walgreens Boots Alliance, Inc. $ 582 $ 3,086 $ 5,073 The accompanying notes to Consolidated Financial Statements are an integral part of these Statements. (in millions) 2020 2019 2018 $ 424 $ 3,962 $ 5,031 1,927 2,038 (43) 137 (382) 100 119 (187) 1,770 (337) (322) 130 (244) 2,016 464 302 296 163 63 (31) (25) 1,008 (221) (16) 5,484 (789) 141 (112) 954 (374) (406) (154) 5,594 (391) 331 (22) 1,352 287 694 (311) 8,263 Cash flows from operating activities: Net carnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Gain on previously held equity interest Deferred income taxes Stock compensation expense Equity carnings from equity method investments Goodwill and intangible asset impairment Other Changes in operating assets and liabilities: Accounts receivable, net Inventories Other current assets Trade accounts payable Accrued expenses and other liabilities Income taxes Other non-current assets and liabilities Net cash provided by operating activities Cash flows from investing activities: Additions to property, plant and equipment Proceeds from sale leaseback transactions Proceeds from sale of other assets Business, investment and asset acquisitions, net of cash acquired Other Net cash used for investing activities Cash flows from financing activities: Net change in short-term debt with maturities of 3 months or less Proceeds from debt Payments of debt Stock purchases Proceeds related to employee stock plans Cash dividends paid Other Net cash used for financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Changes in cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents, and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period (1,367) (1,374) 724 90 (1,702) 3 117 (741) 16 (2,307) (718) (19) (1,297) 655 (4,793) 4 (5,501) (161) 20,367 (21,414) (1,589) 55 (1,747) (157) (4,647) 536 12,433 (10,461) (4,160) 174 (1,643) 75 (3,047) 586 5,900 (4,890) (5,228) 174 (1,739) (98) (5,295) (1) (9) 11 232 (460) 1,207 746 975 1,207 (2,522) 3,496 975 $ $