Question

Please provide a paragrpah (so that is sentences of three or more sentences in the specifed areas mentioned below) of the Finacial Ratio Analysis for CVS and Walgreens. Please include the Current Ratio vs the Acid Test ratio, the Days sales in inventory vs. the inventory turn over in Days and the Days Sales in receivable vs. Accounts receivable turn over in days.

CVS

Balance Sheet

All numbers in thousands

Period Ending	12/31/2017	12/31/2016	12/31/2015
Current Assets
Cash And Cash Equivalents	1,696,000	3,371,000	2,459,000
Short Term Investments	111,000	87,000	88,000
Net Receivables	13,181,000	12,164,000	11,888,000
Inventory	15,296,000	14,760,000	14,001,000
Other Current Assets	945,000	660,000	722,000
Total Current Assets	31,229,000	31,042,000	29,158,000
Long Term Investments	-	-	-
Property Plant and Equipment	10,292,000	10,175,000	9,855,000
Goodwill	38,451,000	38,249,000	38,106,000
Intangible Assets	13,630,000	13,511,000	13,878,000
Accumulated Amortization	-	-	-
Other Assets	1,529,000	1,485,000	1,440,000
Deferred Long Term Asset Charges	-	-	-
Total Assets	95,131,000	94,462,000	92,437,000
Current Liabilities
Accounts Payable	15,472,000	14,883,000	14,319,000
Short/Current Long Term Debt	15,176,000	11,367,000	8,850,000
Other Current Liabilities	-	-	-
Total Current Liabilities	30,648,000	26,250,000	23,169,000
Long Term Debt	22,181,000	25,615,000	26,267,000
Other Liabilities	1,611,000	1,549,000	1,542,000
Deferred Long Term Liability Charges	2,996,000	4,214,000	4,217,000
Minority Interest	4,000	4,000	7,000
Negative Goodwill	-	-	-
Total Liabilities	57,440,000	57,632,000	55,202,000
Stockholders' Equity
Misc. Stocks Options Warrants	-	-	39,000
Redeemable Preferred Stock	-	-	-
Preferred Stock	-	-	-
Common Stock	17,000	17,000	17,000
Retained Earnings	43,556,000	38,983,000	35,506,000
Treasury Stock	-37,765,000	-33,452,000	-28,886,000
Capital Surplus	32,079,000	31,618,000	30,948,000
Other Stockholder Equity	-196,000	-336,000	-389,000
Total Stockholder Equity	37,691,000	36,830,000	37,196,000
Net Tangible Assets	-14,390,000	-14,930,000	-14,788,000

Income Statement

All numbers in thousands

Revenue	12/31/2017	12/31/2016	12/31/2015
Total Revenue	184,765,000	177,526,000	153,290,000
Cost of Revenue	156,220,000	148,669,000	126,762,000
Gross Profit	28,545,000	28,857,000	26,528,000
Operating Expenses
Research Development	-	-	-
Selling General and Administrative	-	-	-
Non Recurring	-	-	-
Others	-	-	-
Total Operating Expenses	-	-	-
Operating Income or Loss	9,517,000	10,366,000	9,475,000
Income from Continuing Operations
Total Other Income/Expenses Net	-208,000	-671,000	-21,000
Earnings Before Interest and Taxes	9,309,000	9,695,000	9,454,000
Interest Expense	1,041,000	1,058,000	838,000
Income Before Tax	8,268,000	8,637,000	8,616,000
Income Tax Expense	1,637,000	3,317,000	3,386,000
Minority Interest	4,000	4,000	7,000
Net Income From Continuing Ops	6,631,000	5,320,000	5,230,000
Non-recurring Events
Discontinued Operations	-8,000	-1,000	9,000
Extraordinary Items	-	-	-
Effect Of Accounting Changes	-	-	-
Other Items	-	-	-
Net Income
Net Income	6,622,000	5,317,000	5,237,000
Preferred Stock And Other Adjustments	-	-	-
Net Income Applicable To Common Shares	6,622,000	5,317,000	5,237,000

Walgreens

Income Statement

All numbers in thousands

Revenue	8/31/2017	8/31/2016	8/31/2015
Total Revenue	118,214,000	117,351,000	103,444,000
Cost of Revenue	89,052,000	87,477,000	76,691,000
Gross Profit	29,162,000	29,874,000	26,753,000
Operating Expenses
Research Development	-	-	-
Selling General and Administrative	23,605,000	23,873,000	22,085,000
Non Recurring	-	-	-
Others	-	-	-
Total Operating Expenses	-	-	-
Operating Income or Loss	5,557,000	6,001,000	4,668,000
Income from Continuing Operations
Total Other Income/Expenses Net	-11,000	-261,000	1,248,000
Earnings Before Interest and Taxes	5,546,000	5,740,000	5,916,000
Interest Expense	693,000	596,000	605,000
Income Before Tax	4,853,000	5,144,000	5,311,000
Income Tax Expense	752,000	953,000	1,032,000
Minority Interest	808,000	401,000	439,000
Net Income From Continuing Ops	4,078,000	4,173,000	4,220,000
Non-recurring Events
Discontinued Operations	-	-	-
Extraordinary Items	-	-	-
Effect Of Accounting Changes	-	-	-
Other Items	-	-	-
Net Income
Net Income	4,078,000	4,173,000	4,220,000
Preferred Stock And Other Adjustments	-	-	-
Net Income Applicable To Common Shares	4,078,000	4,173,000	4,220,000

Balance Sheet

All numbers in thousands

Period Ending	8/31/2017	8/31/2016	8/31/2015
Current Assets
Cash And Cash Equivalents	3,301,000	9,807,000	3,000,000
Short Term Investments	-	-	-
Net Receivables	6,528,000	6,260,000	6,849,000
Inventory	8,899,000	8,956,000	8,678,000
Other Current Assets	1,025,000	860,000	1,130,000
Total Current Assets	19,753,000	25,883,000	19,657,000
Long Term Investments	6,320,000	6,174,000	1,242,000
Property Plant and Equipment	13,642,000	14,335,000	15,068,000
Goodwill	15,632,000	15,527,000	16,372,000
Intangible Assets	10,156,000	10,302,000	12,351,000
Accumulated Amortization	-	-	-
Other Assets	506,000	467,000	4,092,000
Deferred Long Term Asset Charges	-	-	-
Total Assets	66,009,000	72,688,000	68,782,000
Current Liabilities
Accounts Payable	18,296,000	16,690,000	15,489,000
Short/Current Long Term Debt	251,000	323,000	1,068,000
Other Current Liabilities	-	-	-
Total Current Liabilities	18,547,000	17,013,000	16,557,000
Long Term Debt	12,684,000	18,705,000	13,315,000
Other Liabilities	4,223,000	4,045,000	4,072,000
Deferred Long Term Liability Charges	2,281,000	2,644,000	3,538,000
Minority Interest	808,000	401,000	439,000
Negative Goodwill	-	-	-
Total Liabilities	37,735,000	42,407,000	37,482,000
Stockholders' Equity
Misc. Stocks Options Warrants	-	-	-
Redeemable Preferred Stock	-	-	-
Preferred Stock	-	-	-
Common Stock	12,000	12,000	12,000
Retained Earnings	30,137,000	27,684,000	25,089,000
Treasury Stock	-9,971,000	-4,934,000	-3,977,000
Capital Surplus	10,339,000	10,111,000	9,953,000
Other Stockholder Equity	-3,051,000	-2,993,000	-216,000
Total Stockholder Equity	27,466,000	29,880,000	30,861,000
Net Tangible Assets	1,678,000	4,051,000	2,138,000

Answer 1

1. Current Ratio vs Acid Test Ratio

	CVS				Walgreens
	2015	2016	2017		2015	2016	2017
Current Ratio = CA/CL
Current Assets	29158000	31042000	31229000		19657000	25883000	19753000
Current Liabilities	23169000	26250000	30648000		16557000	17013000	18547000
	1.26	1.18	1.02		1.19	1.52	1.07
Acid Test Ratio = Quick Assets/CL
Quick Assets = CA-Inventory	15157000	16282000	15933000		10979000	16927000	10854000
Current Liabilities	23169000	26250000	30648000		16557000	17013000	18547000
	0.65	0.62	0.52		0.66	0.99	0.59

2. Inventory Turnover in Days

	CVS				Walgreens
	2015	2016	2017		2015	2016	2017
Inventory turnover in Days
Cost of Goods Sold	126762000	148669000	156220000		76691000	87477000	89052000
Average Inventory {(opening + closing)/2}	14001000	14380500	15028000		8678000	8817000	8927500
Inventory Turnover Ratio = COGS/Average Inventory	9.05	10.34	10.40		8.84	9.92	9.98
Inventory turnover in Days = 365/ Inventory turnover	40.31	35.31	35.11		41.30	36.79	36.59

3.  

	CVS				Walgreens
	2015	2016	2017		2015	2016	2017
Accounts receivables turover in days
Credit sales	153290000	177526000	184765000		103444000	117351000	118214000
Average Accounts Receivables (openning + closing /2)	11888000	12026000	12672500		6849000	6554500	6394000
Receivables turover= Credit sales/ average recivables	12.89	14.76	14.58		15.10	17.90	18.49
Accounts receivables turnover in days = 365/Receivables Turover Ratio	28.31	24.73	25.03		24.17	20.39	19.74

Note:

a) As the amount of credit sales is not given hence all the revenue amount has been assumed as credit sales.

b) The days sales in inventory or the inventory turn over in days is one and same thing.

c)  The days sales in receivable or accounts receivable turn over in days is one and same thing

SOLUTION: comment

Current, as well as acid test ratio of both the companies, is below the rule of thumb which is 2:1 fro current ratio and 1:1 for acid test ratio. But the Walgreen in a better situation as compared to the CVS, further the current and acid test ratio of CVS is deteriorated over the last three years. Inventory turnover in days shows that both the companies on average take 35 days to convert its inventory into sales and there is a decrease in the number of days to convert inventory into sales over the period of last three years. It shows that both the companies are increasing their efficiencies on account of inventory handling. but Receivables turnover ratio shows that Walgreen is more efficient in receivables management than CVS as it takes on average 20 days to collect receivables as compare to CVS that takes 25 days. Overall, it can be infered from ananlysis that Walgreen performing better than CVS.