Problem14-11 Using the information in Tables 14.1 and 14.2, compute the financia

Question

Problem14-11
Using the information in Tables 14.1 and 14.2, compute the financial ratios we discussed in this chapter for Walgreens, using the 2010 and 2009 data. Answers: Enter the answers in blue shaded cells Ratio (text) 2010 2009 Current ratio T C C Quick Ratio T C C Average Payment Period T C C Total Asset Turnover T C C Fixed Asset Turnover T C C Average Collection Period T C C Inventory Turnover T C C Total Debt to Total Assets T C C Equity Multiplier T C C Interest Coverage T C C Operating Profit Margin T C C Net Profit Margin T C C Operating Return on Assets T C C Return on Assets T C C Return on Equity T C C Table 14.1 Balance Sheets for Walgreens ($millions) 2012 2011 2010 2009 Cash & Cashe Equivalents 1,297 1,556 1,880 2,087 Short-Term Investments 0 0 0 500 Accounts Receivable 2,167 2,497 2,450 2,496 Invetories 7,036 8,044 7,378 6,789 Other Current Assets 260 225 214 177 Total Current Assets 10,760 12,322 11,922 12,049 Net Fixed Assets 12,038 11,526 11,184 10,802 Other Long-term Assets 8,503 1,589 168 830 Goodwill & intangibles 2,161 2,017 3,001 1,461 Total Fixed Assets 22,702 15,132 14,353 13,093 Total assets 33,462 27,454 26,275 25,142 Accounts Payable 4,384 4,810 4,585 4,308 Short-Term Debt 1,317 13 12 15 Other Current Laibilities 3,019 3,260 2,836 2,446 Total Current Liabilities 8,722 8,083 7,433 6,769 Long-term Debt 4,073 2396 2,389 2,336 other Liabilities 2,431 2,128 2,053 1,661 TOTAL LIABILITITES 15,226 12,607 11,875 10,766 Preferred Equity 0 0 0 0 Common Equity + Retained Earnings 18,236 14,847 14,400 14,376 STOCKHOLDERS EQUITY 18,236 14,847 14,400 14,376 TOTAL LIABILITIS & EQUITY 33,462 27,454 26,275 25,142 Table 14.2 Income Statements for Walgreens ($millions) 2012 2011 2010 2009 Revenue 71,633 72,184 67,420 63,335 Cost of Goods Sold 50,125 51,692 47,414 44,865 Selling, General and Administrative 16,878 16,561 15,518 14,209 Deprecation & Amortization 1,166 0 1,030 975 Orperting Income 3,464 3,931 3,458 3,256 Interest Expense 88 71 85 83 Other Expenses (Income) 0 -434 0 9 Income Before Taxes 3,376 4,294 3,373 3,164 Income Taxes 1,249 1,580 1,282 1,158 Net Income 2,127 2,714 2,091 2,006 Earnings Per Share 2.42 2.94 2.12 2.02 Problem14-11
Using the information in Tables 14.1 and 14.2, compute the financial ratios we discussed in this chapter for Walgreens, using the 2010 and 2009 data. Answers: Enter the answers in blue shaded cells Ratio (text) 2010 2009 Current ratio T C C Quick Ratio T C C Average Payment Period T C C Total Asset Turnover T C C Fixed Asset Turnover T C C Average Collection Period T C C Inventory Turnover T C C Total Debt to Total Assets T C C Equity Multiplier T C C Interest Coverage T C C Operating Profit Margin T C C Net Profit Margin T C C Operating Return on Assets T C C Return on Assets T C C Return on Equity T C C Table 14.1 Balance Sheets for Walgreens ($millions) 2012 2011 2010 2009 Cash & Cashe Equivalents 1,297 1,556 1,880 2,087 Short-Term Investments 0 0 0 500 Accounts Receivable 2,167 2,497 2,450 2,496 Invetories 7,036 8,044 7,378 6,789 Other Current Assets 260 225 214 177 Total Current Assets 10,760 12,322 11,922 12,049 Net Fixed Assets 12,038 11,526 11,184 10,802 Other Long-term Assets 8,503 1,589 168 830 Goodwill & intangibles 2,161 2,017 3,001 1,461 Total Fixed Assets 22,702 15,132 14,353 13,093 Total assets 33,462 27,454 26,275 25,142 Accounts Payable 4,384 4,810 4,585 4,308 Short-Term Debt 1,317 13 12 15 Other Current Laibilities 3,019 3,260 2,836 2,446 Total Current Liabilities 8,722 8,083 7,433 6,769 Long-term Debt 4,073 2396 2,389 2,336 other Liabilities 2,431 2,128 2,053 1,661 TOTAL LIABILITITES 15,226 12,607 11,875 10,766 Preferred Equity 0 0 0 0 Common Equity + Retained Earnings 18,236 14,847 14,400 14,376 STOCKHOLDERS EQUITY 18,236 14,847 14,400 14,376 TOTAL LIABILITIS & EQUITY 33,462 27,454 26,275 25,142 Table 14.2 Income Statements for Walgreens ($millions) 2012 2011 2010 2009 Revenue 71,633 72,184 67,420 63,335 Cost of Goods Sold 50,125 51,692 47,414 44,865 Selling, General and Administrative 16,878 16,561 15,518 14,209 Deprecation & Amortization 1,166 0 1,030 975 Orperting Income 3,464 3,931 3,458 3,256 Interest Expense 88 71 85 83 Other Expenses (Income) 0 -434 0 9 Income Before Taxes 3,376 4,294 3,373 3,164 Income Taxes 1,249 1,580 1,282 1,158 Net Income 2,127 2,714 2,091 2,006 Earnings Per Share 2.42 2.94 2.12 2.02

Explanation / Answer

We are assuming that these balance sheet values are at the beginning of the period.

Purchases = Beginning Inventory + Ending Inventory - Cost of Goods Sold

Purchases for 2009 = 6789 + 44865 - 7378 = $44,276 mn

Purchases for 2010 = 7378 + 47414 - 8044 = $46,748 mn

Ratio (Formula) 2010 2009 Current ratio Current Assets / Current Liabilities 1.60 1.78 Quick Ratio (Current Assets - Inventories)/ Current Liabilities 0.61 0.78 Average Payment Period Average Accounts Payable * 365 / Purchases 36.68 36.66 Total Asset Turnover Revenue / Average Total Assets 2.51 2.46 Fixed Asset Turnover Revenue / Average Fixed Assets 4.57 4.62 Average Collection Period Average Accounts Receivable * 365 / Revenue 13.39 14.25 Inventory Turnover Cost of Goods Sold / Average Inventory 6.15 6.33 Total Debt to Total Assets Total Debt / Total Assets 0.09 0.09 Equity Multiplier Total Assets / Total Shareholder's Equity 1.82 1.75 Interest Coverage Operating Income / Interest Expense 40.68 39.23 Operating Profit Margin Operating Income / Revenue 5.13% 5.14% Net Profit Margin Net Income / Revenue 3.10% 3.17% Operating Return on Assets Operating Income / Total Assets 13.16% 12.95% Return on Assets Net Income / Total Assets 7.96% 7.98% Return on Equity Net Income / Shareholder's Equity 14.52% 13.95%

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