Selected balance sheet and income statement information for drug store retailers

Question

Selected balance sheet and income statement information for drug store retailers CVS Caremark Corp. and Walgreen Co. follows...

a. Compute the 2012 return on net operating assets (RNOA) for each company.

b. Disaggregate RNOA into net operating pro?t margin (NOPM) and net operating asset turnover (NOAT) for each company.

c. Discuss any differences in these ratios for each company

2012 Net 2011 Net 2012 Sales 2012 NOPAT $123,133 $4,452 2,182 Company ($ millions) Ticker Assets Assets $46,152$46,677 15,700 CVS Caremark . . 71,633 21,465

Explanation / Answer

return on net operating assets is higher for Walgreen so as the NOAT. however the net operating profit margin is higher for CVS Caremark

Sales NOPAT Net Operating assets 2012 2012 2012 2011 Average CVS Caremark           123,133         4,452          46,152          46,677      46,415 Walgreen Co             71,633         2,182          21,465          15,700      18,583

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