Walgreens vs Cvs Accounting

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ACC 501 Summary: CVS Caremark and Walgreens Co. are both free-standing pharmacies and stores (drug-retail). Both CVS Caremark Corporation and Walgreen Co. provide prescriptions and healthcare services (including nonprescription and OTC drugs), and general merchandise in the United States. Both offer walk-in clinic services, photo development, as well as basic grocery options. CVS has approximately 7,001 stores across 45 states and Puerto Rico (the second largest to Walgreen Co. in the US), and was founded in Massachusetts in 1963. Walgreens operates in all 50 states with about 7,034 stores in the US, the District of Columbia and Puerto Rico. Walgreens was founded in Chicago, IL in 1901 and has since expanded. Ratios + Comments:…show more content…
Keep in mind ROE equals ROA multiplied by Leverage (Assets/Equity). This being said CVS’s drastic downward jump can be explained not by its ROA (it stays fairly constant as we saw previously) but instead by it’s leverage. CVS greatly increased the amount of debt used to finance business operations between the years 2006 and 2007 jumping from around $9,900 to $31,000. Why CVS made this decision exactly is unknown. Walgreen’s total equity climbed at a constant rate by about a $1000 per year starting at about $9,000 in 2005 to $12,000 in 2008. | | |CVS | |Walgreen |Industry | |Ratio |Year |Caremark | |Co. |Average | |Debt |2008 |19.28% | |6.52% |1.5 | | |2007 |19.16% | |6.32% | | | |2006 |24.59% | |3.59% | | | |2005 |14.32% | |2.60% | | | |2004 |19.54% | |2.08% | The debt ratio explains the amount of debt maintained by both respective companies, and represents the amount of debt used by the company to finance business operations and is

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