Cvs Financial Ratios

Inventory Method: The inventory amount for the year ended 12/31/2016 is $14,760,000,000 which is an $759,000,000 increase from the previous year. CVS uses the lesser of the weighted average cost or market value when determining the value of inventory. Inventory is verified for accuracy by regularly doing physical counts in all locations. Between physical counts, CVS uses sales results from previous years to accrue the estimated physical loss. These estimates are determined for each individual store and warehouse separately to ensure the most accurate information possible is reported. CVS has decided to use a new method available after annual periods beginning after 12/15/2016 known as the lower of cost and net realizable value to replace using

In the past few years, they have experienced a significant increase in inventory days. Not having attractive inventory leads to a decrease in sales and an increase in discounts and write offs leading to further decreases in EBITDA Margins. In 2009, the inventory turnover took 215 days. This is significantly above Le Chateaus competitors, for example Reitman’s inventory took only 72 days (Annual Report 2010). This means it takes Le Chateaus three times as long to sell inventory compared to their competitors. To make matters worse, this trend has been exacerbated in recent years. Le Chateau’s turnover has ballooned to a staggering 341 days while Reitman’s has kept inventory turnover stable at only 76 days.

Inventory turnover measures the company’s efficiency in turning its inventory into sales. Its purpose is to measure the liquidity of the inventory (Carey, 2009)

A more tell tale sign is the quick ratio, or acid test, which has increased year after year. Debt to total assets has decreased over 5% since 2001, indicating less financing of current and long term debt and more company assets. Their cash debt coverage far surpasses the ideal 20%, indicating a high level of solvency with sufficient funds and assets to satisfy all debtors. Asset turnover has more or less maintained at right around 1.6, signifying a turnover rate of just less than 180 times per year.

CVS’s capital structure relies on a level of debt. Though they do not have enough liquid assets to satisfy current debt level, operating profits are adequate to service the debt. Accounts receivables are 24.58 days sales outstanding. Inventory processing period is at 36.04 days. CVS’s cost of capital is 10.29% and return on invested capital is 11.02%.

Balance Sheet ratios include a current ratio of 2.755, this ratio shows the relationship of current assets to current liabilities. A ratio of 2.755:1 means that for every $1 in current liabilities there are $2.76 of current assets. Another important financial ratio is to look at the working capital. Working capital is calculated by subtracting current liabilities from current assets. CMC’s working capital at year end was $63,850.29.

In order for us to manage a company’s long-term debt obligations, financial leverage ratios are used. The basic question that is asked is; can the company meet its obligations over the long term? In order to answer this question, we look at three ratios, debt ratio, times interest earned, and cash coverage ratio. The debt ratio was figured to

On JB Hunt’s balance sheet for 2011 lists current assets of $513,542,000 and current liabilities of $438,515,000, yielding a current ratio of 1.17, which indicates the company, has $1.17 of current assets for every $1 of current liabilities. The previous year 2010, the current ratio was 0.91. This shows a 29% increase in the current ratio over the previous year. An organization with a current ratio of 2 or higher is usually viewed by lenders to be a safe risk for short-term credit. Based on the 29% increase in current ratio, JB Hunt is in a better position to obtain

In order to evaluate your understanding of the use of accounting information, you are asked to analyze the 2007 financial statements of The Procter & Gamble Company (P&G). The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website,

The company is in a position to meet their current liabilities using the current available assets both in the two years. The point of concern is that both the current and the acid test ratios have decreased comparing the ratios in 2014 and 2015. The point of concern also is that the firm hasn't hit the recommended current ratio of 1:2 (Penman & Penman, 2001).

Inventory can be a very sticky asset and may take a significant amount of time to get rid of in most industries. The reason for omitting inventory when calculating the quick ratio for a firm is to keep in mind that we are trying to compute their short term liquidity. S&S Air’s quick ratio came out to be 0.4358 compared to a median of 0.38 and an upper quartile of 0.62 within the Light Airplane industry. This places them in between the average and the upper quartile, which is a positive sign indicating that the firm is managing their inventories in a proper manner. However, since S&S Air focuses its operations on manufacturing airplanes to order, the firm’s inventory can be managed more precisely, which in return would increase their quick ratio and liquidity, positioning them within the upper

Inventory often is one of the largest amounts listed under assets on the balance sheet which means that it represents a significant amount of the resources available to the business. The inventory may be excessive in amount, which is a needless waste of resources; alternatively it may be too low, which may result in lost sales. Therefore, for internal users inventory control is very important. On the income statement, inventory exerts a direct impact on the amount of income. Therefore, statement users are interested particularly in the amount of this effect and the way in which inventory is measured. Because of its impact on both

In terms of financial flexibility, a relatively high interest coverage ratio (ICR) of 36.8 supports the company’s ability to Flexibility take on more debt. Especially by comparing the ratio with its peers, such ratio seems to match with its risk aversion philosophy. Agency Cost of Debt

The coverage ratios use cash flow from operations in most cases. Coverage ratios are important to long term investors and creditors because of the nature of the ratios that show the availability of cash to pay for items that include long term debts and dividends as well calculating percentages of cash flow from operations to shareholders equity, and average number of common shares outstanding (Ibarra, 2009). In addition, it has been determined that the cash flow to total debt (a coverage ratio) can be used as one of the best indicators of financial distress (Jooste, 2007). In all coverage ratios, a high ratio and increasing trends is the best case scenario.

Based on the graph above, inventory holding period of CN Asia Corporation Berhad slightly increased from 91.28 days in 2014 to 98.97 days in 2015 and drop rapidly to 73.64 days in 2016. Thus, it shows that year 2016 is better than year 2014 and 2015 as the year of 2016 has the lowest inventory holding period ratio. It indicates that the company holds their inventory for 73.64 days before selling it to the customers. So, it demonstrates that CN Asia Corporation Berhad managed their inventories efficiently in year 2016 compared to year 2014 and year 2015. Furthermore, it depicted that the company has fast growth of sales in 2016 compared to other years, which is RM 18,745,524.