Walgreen Versus Cvs Essay

6549 Words Mar 22nd, 2012 27 Pages
Executive Summary
The initial intent of this analysis was to identify changes in accounting methods within the financial statements of Walgreens and CVS Caremark, as well as to compare and contrast their financial statements, in order to draw conclusions about which company had also have better earnings. However, in the process of this analysis, with the exception of a minor change to lease accounting by Walgreens, there were no major changes in accounting methods identified. In examining the financial statements for these two drugstore industry leaders, the analysis shows that while each company conducts retail drugstore operations in similar ways, their business models for carrying out these operations greatly vary. These variances in
…show more content…
Additionally, it shows both companies ability to keep their capital growing with time.
As a result, CVS Caremark reported an earnings before income, taxes, depreciation and amortization margin (EBITDA/Sales) of 7.37% of net revenues in 2011, which was slightly higher than Walgreens7.11%. Although CVS Caremark EBITDA only higher by 0.26% these EBITDA margins are comparable.
Walgreens differentiates itself with a net income margin of 3.76% vs. CVS Caremark 3.23%. The difference was primarily due to interest cost and depreciation & amortization expenses. Walgreens interest cost and depreciation & amortization was $0.071 billion and $1.028 billion as compared to CVS Caremark which was $0.584 and 1.568 billion. This reflects an increase in Walgreens net income.
Revenues
From 2008 to 2011, CVS Caremark reported a compounded annual growth rate of 6.98%, growing to $19.628 billion in total revenues. The increase was primarily driven by the same store sales, the inclusion of the Longs Acquisition, as well as net revenue from new stores and a positive impact related to the growth of our Maintenance Choice program. As of December 2011 CVS Caremark stores were 7,327 as new retail stores opened 247and closed stores were 102in fiscal year 2011.During 2010, CVS Caremark operated 7,182 retail stores, compared to 7,025 retail stores on December 31, 2009, and 6,923

More about Walgreen Versus Cvs Essay

Open Document